Weekly Agribusiness News Recap

By: "Farm Tender" News
Hay & Fodder News
Jul 25, 2019
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This article is bought to you by Mecardo.

By Georgia Devenish - Agricultural Research Analyst at JLL.

Livestock

Last week heavy lamb prices reached $10 per kilogram, reflecting a 26 cents per kilogram gain on the week prior and a 205 cents per kilogram premium on prices from the same time last year. The Eastern States Trade Lamb Indicator also hit a new record of 950 cents per kilogram last week. Supply shortages are the key reason for these price hikes. Mecardo analyst, Matt Dalgleish, said the high heavy lamb price was driven by low marketings from New South Wales, where seasonal conditions had severely impacted production.

At the Grassland Society of Southern Australia’s 60th conference in Creswick last week, independent beef analyst, trader and broker, Simon Quilty, suggested young cattle prices could reach as high as 850 cents per kilogram in September 2021. A protein shortage in China - in relation to the spread of African Swine Fever - and a significantly depleted national cattle herd were highlighted as key reasons for the forecast record prices. Mr Quilty said consequences of the “never-before seen rate of liquidation” in the Australian female cattle herd and the loss of 600,000 cattle during the floods in Northern Australia earlier this year were likely to be felt for many years.

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Wine/Viticulture

The value of Australia wine exports has increased by four percent in 2018/19 to reach $2.8 billion according to statistics released by Wine Australia. China represented the largest market growth increasing in value by 7 percent to $1.2 billion. China leads by a considerable margin in terms of export value, the United States as the second largest export market falls behind at $432 million. Surprisingly, if we look at the largest export markets on a volume basis, China (17.2 million cases) falls behind the United Kingdom (17.1 million cases), which came in at third on a value basis.

Based on figures from the first five months of 2019, Australia has become the number one imported wine category in mainland China by value, overtaking France for the top spot. The China-Australia Free Trade Agreement has been fundamental to the increase in value with the removal of all import duties on Australian bottled and bulk wine occurring on 1 January 2019.

Speaking at the 17th Australian Wine Industry Technical Conference, Seppeltsfield owner, Warren Randall, highlighted the fact that Australian wine exports to China had grown from 1 million litres in 1997 to more than 150 million litres per year. Exports had increased at the compound growth rate of 36 percent from 2015 to 2018. According to the recent export report released by Wine Australia, the average price per litre of Australian wine headed to China was $6.64, almost double the global average. Wine Australia CEO, Andreas Clark, told the conference that the overall four percent growth in export value despite a six percent reduction in volume showed the strategy of premiumisation of Australian wine was working.

Agribusiness

Two Victorian fruit farmers, including the nation's biggest grower of organic grapes, will expand their production after receiving interest-free loans from Woolworths. This is part of a bid by the supermarket to obtain a larger share of the organic produce market segment. The funds were secured as part of Woolworth's $30 million Organic Growth Fund; a strategic move by the company to ensure a consistent supply of organic produce into the future. The first Victorian farmers to receive funds are a table grape operation near Mildura owned by the Dichiera family and Manna Farms, based near Colignan.

Property

During 2018/19, 229 Tasmanian properties were sold to international buyers for a combined value of $164 million. This represented approximately 1 percent of all sales within the state. Of these purchases, according to figures tabled by the Legislative Council, 37 international purchases of primary production land occurred during this period. The Meander Valley attracted the greatest foreign investment, with five transactions totalling $13 million, followed by Circular Head, with four sales worth $29 million and Central Highlands and Dorset, also with four sales each.

Geoff Warriner and Chris Holgar from JLL Agribusiness have been appointed to handle the auction of central Australian cattle property, "Idracowra Station". "Idracowra" is being offered by Shoujaa, a company owned by Abu Dhabi's royal ruling family member, Sheikh Hamad Bin Hamdan Al Nayhan. The Sheikh bought the property in 2007. The 462,800 hectare pastoral lease is located 120 kilometres south of Alice Springs and has an estimated carrying capacity is 7,500 adult cattle equivalents. "Idracowra" will be auctioned by JLL Agribusiness in Adelaide on 6 September 2019.

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Solar

The Victorian government has released new planning guidelines for large-scale solar farms. The final 'Solar Energy Facilities - Design and Development Guideline' will be used to help inform a range of decision makers, solar farm developers and communities on planning requirements for large-scale solar farms. Acting Planning Minister, Lily D'Ambrosio, said, "With solar technology taking off in Victoria, we need to provide clear advice on how to establish best practice facilities in appropriate locations."

Wool

Wool traders have entered the 2019/20 season uneasy over how China-US trade frictions may impact business. Since April 2019, Chinese textile mills have been scaling down their buying orders and processing activities which sent wool auction prices on a decline to 172 cents per kilogram in June. Furthermore, domestic shoppers in China, who consume half of China's processed wool, are spending less, while demand from European and North American has also slowed.

Traders are also concerned about a future shortage of farm wool supplies. Industry forecasts put national greasy wool production at 285 million kilograms for the 2019/20 season. This reflects a decrease from the 298 million kilograms produced in 2018/19. The forecast puts production at just one third its size in 1990, while the national sheep flock is at its smallest size since the mid 1920s.

Podcast of the Week

Agricultural Scientist Chris Russell explores the critical issues affecting the next 50 years in Australian agriculture in "Agriminders". In each episode Chris speaks with the key figures tasked with securing the future of our food and fibre production in Australia and discusses how Australian agricultural issues can also have a wider impact on a global scale.