Australia farm commodity price index down in June

 

 

An Australian farm commodity price index fell again in June, despite indications downward pressure on prices over the past 12 months is starting to dissipate as traditional demand and supply forces re-emerge, according to a statement issued Monday (July 20) by lobby National Farmers Federation and Westpac banking Corp. (WBC.AU).

 

The panic arising from the global financial crisis saw global farm commodity prices fall, with a Westpac-NFF Commodity Index showing a 3.1 percent decline in June from May to an index level of 122 and a 13 percent fall on year, according to the statement.

 

The index in US dollar terms rose 2.0 percent in June from May to 143, up 26 percent on year.

 

The world economy is beginning to pull out of one of the most severe recessions of the past 60 years, with Westpac senior agribusiness economist Andrew Hanlan noting the International Monetary Fund upgraded its world growth forecast for 2010 to 2.5 percent from 1.9 percent previously.

 

"Industry is now able to refocus on individual commodity trends that were largely irrelevant in the wake of the global financial crisis," he said.

 

"We are now starting to see both long- and short-term opportunities arising for individual agricultural commodities, particularly for barley and sugar - where relatively tight market conditions are supporting global prices."

 

Hanlan attributed the decline in the index in June to a recent strengthening of the Australian currency, which rose against the US dollar by 5.3 percent on- month and 19 percent over six months, though it fell 16 percent on year.

 

A standout commodity in June was barley, the price of which rose 10 percent in the month, with markets now placing greater emphasis on predictions of falling global barley production in key exporting countries, he said.

 

Commodities that saw on-month falls in June were wheat, canola, cotton, sugar, export beef, dairy products and wool, exports of most of which make Australia a major supplier to the global farm trade.

 

While sugar prices fell 2.4 percent on- month in June, they were up 61 percent on -year.