A bumper year for wool and wine exports is being driven by continued growth by the Chinese market. Image by Stefano Lubiana under a CC2.0 license.
Improving global markets and increasing wealth amongst Asian populations is set to continue positive growth in Australian Agriculture in 2018.
At the top of the charts are Australian wine and wool exports, which are set to enjoy the biggest increase in demand.
“A key standout for us is the wine industry which we expect to have its best year for many years in 2018,” said Tim Hunt, who wrote Rabobank’s Agribusiness Outlook 2018 report.
Wine exports increased by 15 per cent in 2017, worth $2.56 billion. In the same year, Australian agricultural exports to China increased by 63 per cent, valued at $848 million.
Chinese demand for wool resulted in wool prices rising to record prices, with a 70 per cent increase in exports.
Export buyer Scott Carmody predicts the demand for Australian wool will continue.
‘They are hungry for our wool clip we’ve got plenty of orders being written into prompt shipment … so we can only see the demand staying.”
Sector Round-Up 2018
Forecasts by sector, based on information from Rabobank’s Agribusiness Outlook 2018 report:
- Wheat – a small price improvement is expected as demand increases and stocks decline
- Barley – prices due to remain elevated as global stocks weaken
- Dairy – trading conditions will be broadly attractive for dairy growers
- Beef – growing domestic stocks and competition from other exporting countries will put downward pressure on Australian cattle prices
- Sheepmeat – strong demand set to maintain strong prices
- Sugar – the price of sugar is set to decline as the global sugar market returns to surplus
- Cotton – price decline predicted for the second half of 2018
- Wool – strong demand set to continue favourable prices
- Wine – sector predicted to enjoy its best year in a long time
- Horticulture – set to enjoy continuing growth on the back of overseas demand for high-quality fresh produce
- Fertiliser – prices to remain flat due to oversupply
Potential Downsides
Of concern to farmers across Australia, is the dry conditions and lack of forecasted rain. The Bureau of Meteorology is predicting drier than average conditions for Southwest Australia and Western Victoria between May and July, in addition to the hotter than average autumn conditions experienced in March and April.
Other threats to agricultural profitability could come from geopolitical factors such as China withdrawing from lucrative trade agreements. China’s debt level could also be a concern – when addressed, it is forecast to impact interest rates, economic growth and currency value locally, with flow-on effects to trade partners.
Sources: ABC, ABC, Bureau of Meteorology