The NAB Rural Commodities Index rose 2.1 per cent in October, the first increase since May.
The increase was driven largely by an increase in cattle prices, while the latest report showed the index was also pushed up by lamb, fruit and vegetables, while domestic grain prices fell.
‘‘Cattle prices roared back to life after good rains in Queensland and NSW after months of abnormally dry conditions,’’ NAB Agribusiness economist Phin Ziebell said.
‘‘After almost reaching the key 500¢ mark at the end of September, the Eastern Young Cattle Indicator is now over 575¢/kg and still rising,’’ he said.
‘‘However, even if seasonal conditions remain strong, key export markets remain a challenge as Australian prices remain detached from US fundamentals in many ways.
‘‘Lamb prices continue to display incredible resilience in the face of the usual spring flush, with the MLA National Trade Lamb Indicator well over 600¢ and is substantially higher than the same time last year.’’
The wool market is almost back to record-breaking highs, rising in October after a decline in September.
The spike in coarser wools looks to have abated, but fine and super-fine wool remains at a substantial premium.
Mr Ziebell said the wheat forecast remained at 18.7million tonnes, as October rainfall in NSW was arguably too late to boost yields.
‘‘Domestic grain prices fell in October, while feed prices rose 2.4 per cent.
‘‘Some of the pressure on prices due to the current shortage of feed grain in the domestic market is likely to be alleviated, after rains across NSW and Queensland boosted planting conditions for sorghum and expectations for pasture growth.
‘‘Nonetheless, domestic grain is likely to remain at a premium for the rest of 2017.’’
Prices for most coarse grains have fallen back recently, especially sorghum, while rice looks to be relegated to second place in the NSW Riverina this season in favour of more profitable (and generally less water-intensive) cotton.
The Australian dollar remains higher than most agricultural producers would like, recent pressure has been downward, and NAB sees the currency falling to 75 US cents at the end of this year and spending most of next year at the 73 US cent mark.
Interest rate forecasts remain unchanged, with NAB predicting the next movement to be up, in both August and November 2018, with two further hikes anticipated for 2019.