NATIONAL CROP UPDATE OCT 2015

Transcription

1 NATIONAL CROP UPDATE OCT 215

2 For further information: E ag.answers@ruralfinance.com.au P Authored by: Jonathan Creese, Manager Ag Answers Matthew Ough, Ag Answers Senior Analyst P ruralbank.com.au P ruralfinance.com.au About Rural Bank, Rural Finance and Ag Answers Rural Bank has been a wholly-owned subsidiary of Bendigo and Adelaide Bank Limited since 21 and is the only Australian-owned and operated dedicated agribusiness bank in the country. From 1 July 214, Victorian agribusiness lender, Rural Finance joined Rural Bank as a division of Bendigo and Adelaide Bank Limited. As a specialist rural lender, Rural Finance has been fostering the sustainable economic growth of rural and regional Victoria for more than 65 years. Together, Rural Bank and Rural Finance are supporting farmers and farming communities by providing them with specialist financial tools, industry insights and investment into the future of the Australian agribusiness sector. Rural Bank s specialist farm finance tools are available nationally via a network of banking partners, including Bendigo Bank and Community Bank branches and Elders Rural Services. Ag Answers is a specialist insights division of Rural Bank and Rural Finance. Recognising that good information is the key to making good business decisions, Ag Answers provides research and analysis into commodities, farmland values, farm business performance and topical agricultural issues to enable farmers to make informed decisions. Special acknowledgement As agricultural specialists, Elders Rural Services offers insight into local market conditions for the cropping sector. We thank Elders for their valuable contribution to this report by providing local commentary. The National Crop Update includes state-based statistics and forecasts on grain production, predicted wheat yields by local shires, growing season rainfall, grain prices, financial performance for an average farm, as well as export performance for grains and seeds. Significant effort has been taken to secure the most recent data available. Wheat yield maps are based on data recorded at 4 October 215, prior to the unprecedented hot weather event that reduced yield potential in many regions. Other harvest forecasts in the report are based on data current to 9 October 215. An index is a statistical measure used to track changes in a particular metric over time, allowing the aggregation of multiple data points into one relevant graph. The information herein is believed to be reliable and has been obtained from public sources believed to be reliable. Rural Bank and Rural Finance make no representation as to the accuracy or completeness of such information. Opinions, estimates and projections in this report constitute the current judgement of the author as of the date of this report. They do not necessarily reflect the opinions of Rural Bank and Rural Finance and are subject to change without notice. Rural Bank and Rural Finance has no obligation to update, modify or amend this report or to otherwise notify a recipient thereof in the event that any opinion, forecast or estimate set forth herein, changes or subsequently becomes inaccurate. This report is provided for informational purposes only and should not be relied upon without consulting your legal and/or tax professional. Copyright Rural Bank Ltd ABN AFSL/Australian Credit Licence and Rural Finance a Division of Bendigo and Adelaide Bank Ltd ABN AFSL/Australian Credit Licence

3 NATIONAL SUMMARY OCTOBER 215 Variable seasonal conditions across Australia will bring mixed results from this season s harvest. A dry September and a hot start to October have reduced yield potential in many cropping regions. Good results are expected for a number of regions in Western Australia and New South Wales. South Australia and Tasmania are expecting a result close to average, while conditions are patchy in Queensland and Victoria due to the lack of growing season rainfall. Nationally, grain production this season is expected to be slightly higher than last year largely due to an increase in the production of legume crops rather than cereals forecast compared with the season Australian grain production and forecast million Million tonnes Wheat Barley Canola. 24.3m tonnes 3% 8.8m tonnes 12% 2.8m tonnes 14% Wheat Barley Canola Source: Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES), Australian Crop Forecasters (ACF), Australian Export Grains Innovation Centre(AEGIC) Local grain prices have rallied ahead of overseas markets as expectations for the Australian crop have declined due to recent dry and hot conditions. The small increase in the Chicago Board of Trade (CBOT) and Intercontinental Exchange (ICE) markets during late September is thought to be due to some concern for global production owing to dry conditions in Russia ahead of planting for 216/17 and the recent drop in yield potential from Australian crops. Nevertheless, the United States Department of Agriculture still expects global wheat production to be the second largest on record, which will make any significant price increase unlikely. The lower Australian dollar will assist grain exporters this season. Australian dollar value $ Oct 214 $.87USD Oct 215 $.71USD Australia s top three reported grain export markets* 2, 2% 18% Australian dollars (million) 2, 1, 1, 16% 14% 12% 1% 8% 6% 4% 2% 212/13 213/14 214/15 212/13 213/14 214/15 212/13 213/14 214/15 China Indonesia Japan China Indonesia Japan 214/15 Export Share % Oats Rice Sorghum Barley Rye Canola Wheat Export Share (RHS) *Exports to unidentified markets total $1.b in The destination of some grain exports is not identified by some exporters. Data: Global Trade Information Services (GTIS)

4 NEW SOUTH WALES OCTOBER 215 New South Wales appears set for a better harvest than the past two seasons and, despite a dry start to the season, much of the state is expecting to deliver average yields. Even so, a number of shires in New South Wales are forecast to achieve wheat yields above the 7th percentile. Wheat exports to Italy improved in 214/15 compared to 213/14. The value of exports to China decreased in 214/15 due to a lower volume of canola and wheat being exported. Production and yield milliontonnes tonnes Million NSW grain production and forecast Predicted shire wheat yields Moree Plains Inverell - Pt A Gwydir Inverell Pt B Brewarrina Walgett Narrabri Bourke Tamworth Regional - Pt B Coonamble Gunnedah Warren Warrumbungle Bogan Liverpool Plains Gilgandra Upper Hunter Shire Dubbo - Pt B Cobar Narromine Lachlan Wellington Mid-Western Regional Pt A Parkes Bathurst Regional Pt B Pt A Cabonne Forbes Wentworth Blayney Carrathool Cowra Young Griffith Boorowa Temora Upper Lachlan Cootamundra Leeton Balranald Sydney Weddin Bland Hay Harden Coolamon Murrumbidgee Narrandera Junee Gundagai Urana Yass Valley Conargo Wakool Wagga Wagga - Pt B Jerilderie Lockhart Murray Wheat Barley Source: ABARES, ACF, AEGIC Canola Berrigan Corowa A.C.T. Greater Hume - Pt B Greater Hume - Pt A Albury C Australian Export Grains Innovation Centre, 215 As at 4 October 215 Growing season rainfall Rainfall decile ranges Growing season rainfall has been close to average for most of the state. Looking towards the harvest period, October to December is likely to be drier than normal in south east New South Wales. Elsewhere in the state, average or below average rainfall is expected. Source: Bureau of Meteorology (BOM) From the field Following a dry start to the season, the wheat crops in north west New South Wales have recovered and growers are hopeful of yields close to average. The crops inspected around Coonamble, Narrabri and Gunnedah have the potential to be as good as last season, although one more finishing rain is necessary if better than average yields are to be achieved. John Ellwood Senior Relationship Manager, Rural Bank, QLD/NSW

5 Prices NSW wheat price - spot and futures NSW canola price - spot and futures Spot del. Newcastle (LHS) CBOT Wheat Mar-16 (RHS) Spot del. Newcastle (LHS) ICE Canola Jan-16 (RHS) Data: Profarmer Current price as at 23 October 215 October 214 Five-year average 8th percentile 2th percentile Wheat $/t Barley $/t Canola $/t Financial performance Index of interest costs, land and improvements value and equity ratio (1999/=1), Farm cash income, Average average $ per farm,, 2, 15, 1, 5, - Interest paid Value of land and fixed improvements Equity ratio Data: ABARES *Farm cash income is the difference between total cash receipts and total cash costs. Export performance NSW top three reported grain export markets 25% Australian dollars (millions) % 15% 1% 5% 212/13 213/14 214/15 212/13 213/14 214/15 212/13 213/14 214/15 China Italy Egypt China Italy Egypt 214/15 Export Share % Data: GTIS Oats Rice Maize Sorghum Barley Rye Canola Wheat export share (RHS)

6 QUEENSLAND OCTOBER 215 Southern Queensland is expecting above average yields as harvest gets under way. Central and northern Queensland experienced below to very much below average growing season rainfall making conditions difficult. Grain prices will begin the harvest period at a slightly higher level compared to 214 for both wheat and sorghum. Sorghum was in high demand from China last season and export value grew significantly, which is likely to continue in 215/16. Statewide, Queensland s harvest is expected to be slightly below average for wheat, while chickpea production is forecast to increase threefold compared to last season. Production and yield QLD grain production and forecast Predicted shire wheat yields million Million tonnes Source: ABARES, ACF, AEGIC Wheat Barley Sorghum Growing season rainfall Rainfall decile ranges As at 4 October 215 Growing season rainfall has been average to below average for most of Queensland s cropping regions. Source: BOM While the chance of a wetter or drier October to December is roughly equal near the coast, the chance of rainfall exceeding the median for the period increases further inland. From the field From the field A great start to winter in the St George and surrounding districts south to Goondiwindi has seen wheat and chickpeas planted from fence to fence. It has been many years since rain fell with consistency over four months. A 2-4 t/ha wheat crop is expected and chickpeas up to 2-2.5t/ha Mark Pain Elders, St George. Growers are optimistic about the harvest that is due to commence in south west Queensland shortly. The wheat crops in south west Queensland have benefited from timely rain and yields of up to t/ha would not be out of the question. John Ellwood Senior Relationship Manager, Rural Bank, QLD/NSW

7 Prices QLD wheat price - spot and futures QLD sorghum price - spot AUD $ / tonne Spot del. Brisbane (LHS) CBOT Wheat Mar-16 (RHS) AUD $ / tonne Spot del. Brisbane (LHS) Data: Profarmer Current price as at 23 October 215 October 214 Five-year average 8th percentile 2th percentile Wheat $/t Barley $/t Sorghum $/t Financial performance Index of interest costs, land and improvements value and equity ratio (1999/=1), Farm cash income, Average average $ per farm, 2, 15, 1, 5, - Interest paid Value of land and fixed improvements Equity ratio Data: ABARES *Farm cash income is the difference between total cash receipts and total cash costs. Export performance Australian dollars (million) QLD top three reported grain export markets 9% 8% 7% 6% 5% 4% 3% 2% 1% 212/13 213/14 214/15 212/13 213/14 214/15 212/13 213/14 214/15 China Japan Taiwan China Japan Taiwan 214/15 Export Share % Data: GTIS Oats Maize Rice Sorghum Barley Rye Canola Wheat export share (RHS)

8 SOUTH AUSTRALIA OCTOBER 215 A mixed result is expected for this season s harvest in South Australia. The Eyre Peninsula is expected to perform better than average while yields on the Yorke Peninsula and in the South East are expected to be slightly below average. Hot weather during late September and early October will bring an early finish to the season. Areas that were dry have already been cut for hay. Nevertheless, state-wide production is anticipated to be similar to last season, with wheat, barley and canola production expected to be 4.3, 1.9 and.2 million tonnes, respectively. Production and yield million Million tonnes SA grain production and forecast Predicted shire wheat yields Wheat Barley Canola Source: ABARES, ACF, AEGIC Growing season rainfall As at 4 October 215 Rainfall decile ranges Growing season rainfall has been close to average west of Spencer Gulf, but progressively drier towards the Victorian border. A wetter than normal harvest period is likely in most South Australia cropping regions, particularly in the west. Source: BOM From the field The West Coast, Mid North and Mallee areas received rain when required during the majority of the growing season despite the prevailing El Nino conditions. The recent spike in temperatures has adversely affected legume crops while cereal yields are expected to remain average to good in most areas. Prevailing dry conditions are affecting cereals that were pushed hard with urea application mid-season. Seasonal conditions in the south east have been inconsistent after a promising start. Yields in this relatively late area will be patchy due to the hot and dry spring. Tom Kennedy - Rural Bank, Adelaide

9 Prices SA wheat price - spot and futures SA canola price - spot and futures Spot del. Port Adelaide (LHS) CBOT Wheat Mar-16 (RHS) SA canola price - spot and futures Spot del. Port Adelaide (LHS) ICE Canola Jan-16 (RHS) Data: Profarmer Current price as at 23 October 215 October 214 Five-year average 8th percentile 2th percentile Wheat $/t Barley $/t Canola $/t Financial performance Index of interest costs, land and improvements value and equity ratio (1999/=1), Farm cash income, Average average $ per farm,, 2, 15, 1, 5, - Interest paid Value of land and fixed improvements Equity ratio Data: ABARES *Farm cash income is the difference between total cash receipts and total cash costs. Export performance SA top three reported grain export markets 3% Australian dollars (millions) % 2% 15% 1% 5% 212/13 213/14 214/15 212/13 213/14 214/15 212/13 213/14 214/15 Indonesia Japan South Korea Indonesia Belgium Vietnam 214/15 Export Share % Data: GTIS Oats Rice Sorghum Barley Rye Canola Wheat export share (RHS)

10 TASMANIA OCTOBER 215 The growing season in Tasmania has been drier than normal leading to an expectation of average to below average crop yields in most cropping regions. Wheat, barley, canola and oat production is expected to be lower than last year at approximately 35, 2, 1.5 and 8 thousand tonnes respectively. Despite lower production this year, local wheat prices appear to be slightly higher than this time last season which, if sustained, will offset lower production and maintain good grain receipts. Production and yield Thousand thousand tonnes TAS grain production and forecast Predicted shire wheat yields Wheat Barley Canola Source: ABARES, ACF, AEGIC As at 4 October 215 Growing season rainfall Rainfall decile ranges With the exception of a pocket south west from Hobart, growing season rainfall in Tasmania has been below average. The chance of rainfall being higher or lower than the median for the October to December period is roughly equal. Source: BOM From the field From the field Levels of wheat, barley and canola plantings are higher this season, most crops are in good health. Dryland crops are growing on surface soil moisture only with little subsoil reserve available, rainfall is now essential for these crops to progress. Irrigated crops are expected to yield well, with 1% water allocations forecast for the summer. Dry winter conditions have allowed poppy ground to be prepared without hindrance, allowing premium sowing schedules. The majority of crops have been irrigated to achieve maximum strike rate, although some poppy seeds treated for mildew failed to germinate and had to be replanted. As with much of the state, most poppies are experiencing dry conditions, relying on irrigation to achieve optimum growing conditions. David Robertson, Dean Lalor and James Cameron Rural Bank, Launceston

11 Prices TAS wheat price - spot and futures TAS canola price - spot and futures Spot del. Powranna (LHS) CBOT Wheat Mar-16 (RHS) SA canola price - spot and futures Spot del. Powranna (LHS) ICE Canola Jan-16 (RHS) Data: Tasmanian Agricultural Producers Current price as at 16 October 215 October 214 Five-year average 8th percentile 2th percentile Wheat $/t Barley $/t Canola $/t Financial performance 16 Index of interest costs, land and improvements value and equity ratio (1999/=1), Farm cash income Average average $ $ per farm,, 2, 15, 1, 5, - Interest paid Value of land and fixed improvements Equity ratio Data: ABARES *Farm cash income is the difference between total cash receipts and total cash costs. Export performance 1,2, TAS top three reported grain export markets 6% 1,, 5% Australian dollars 8, 6,, 4% 3% 2% 2, 1% 212/13 213/14 214/15 212/13 213/14 214/15 212/13 213/14 214/15 Japan Brazil China Japan Brazil China 214/15 Export Share % Data: GTIS Oats Rice Sorghum Barley Rye Canola Wheat export share (RHS)

12 VICTORIA OCTOBER 215 This season has proved difficult for Victorian crop farmers. The majority of the state has experienced below to very much below average growing season rainfall. Crops are being cut for hay in many regions. The wheat price has risen recently as buyers react to the declining yield potential of Australian crops. Export value in the top three markets for Victorian grain declined in 214/15, seemingly due to a lack of quality grain. State production will be similar to last year with wheat, barley and canola production expected to be 2.6, 1.6 and.4 million tonnes respectively. Production and yield VIC grain production and forecast Predicted shire wheat yields Million million tonnes Source: ABARES, ACF, AEGIC Wheat Barley Canola As at 4 October 215 Growing season rainfall Rainfall decile ranges Growing season rainfall has been below average across Victoria s cropping regions. Source: BOM The chance of exceeding median rainfall for the October to December period is roughly equal for most of the state, but slightly higher in the north-west. From the field The dry and hot spring has seen yield potential in the better areas halved (at best reducing yield to 1t 1.5t/ha) while in other areas (particularly heavier ground in the southern Mallee) many crops are beyond salvage. Many vetch crops that were initially sown for hay have now been sprayed out. Dustin Lovell Rural Finance, Swan Hill There is minimal subsoil moisture and as a result, many growers have commenced cutting their cereal crops for hay. Crops in the West Wimmera and south of Horsham look better than those to the east of Horsham and further north however expectations range from average to poor. Luke Riley Rural Bank, Horsham

13 Prices 34 VIC wheat price - spot and futures 8 62 VIC canola price - spot and futures SA canola price - spot and futures Spot del. Geelong (LHS) CBOT Wheat Mar-16 (RHS) Spot del. Geelong (LHS) ICE Canola Jan-16 (RHS) Data: Profarmer Current price as at 23 October 215 October 214 Five-year average 8th percentile 2th percentile Wheat $/t Barley $/t Canola $/t Financial performance Index of interest costs, land and improvements value and equity ratio (1999/=1), Farm cash income, Average average $ per farm,, 2, 15, 1, 5, - Interest paid Value of land and fixed improvements Equity ratio Data: ABARES *Farm cash income is the difference between total cash receipts and total cash costs. Export performance Australian dollars (millions) VIC top three reported grain export markets 2% 18% 16% 14% 12% 1% 8% 6% 4% 2% 212/13 213/14 214/15 212/13 213/14 214/15 212/13 213/14 214/15 China Vietnam New Zealand China Vietnam New Zealand 214/15 Export Share % Data: GTIS Oats Maize Rice Sorghum Barley Rye Canola Wheat export share (RHS)

14 WESTERN AUSTRALIA OCTOBER 215 Early growing season rainfall had set up most of Western Australia s cropping regions for another good harvest, although a drier than normal September and recent localised hail has impacted yield potential. Pending any severe weather events, Western Australia s wheat, barley and canola production is expected to be 8.4, 3.1 and 1.3 million tonnes respectively. Average to slightly above average yields in most regions combined with crop prices trending slightly higher than last year will see good grain receipts for most Western Australian cropping farms this season, continuing Western Australia s run of strong farm cash income. Production and yield million Million tonnes WA grain production and forecast Predicted shire wheat yields Wheat Barley Canola Source: ABARES, ACF, AEGIC As at 4 October 215 Growing season rainfall Rainfall decile ranges Most cropping regions have enjoyed above average rainfall during the growing season. There is a 65-7 per cent chance of exceeding the median rainfall for the October to December period for most cropping regions. Source: BOM From the field The harvest for midwest has begun with farmers at Binnu harvesting canola. Inspected crops should yield above average with the potential of 3.5 to 3.8 t/ha in wheat crops. East of Geraldton the farmers at Mullewa, Morawa, and Mingenew should also be looking at above average crops and the harvest will be well underway for the canola and some wheat crops, which had an early start. The dry finish across the northern wheatbelt should see wheat grading up at the top of the scale. Hay growers don t want any rain right now as they are in the middle of cutting and baling. Kim Holmes and Tim Batger Rural Bank, Perth

15 Prices WA wheat price - spot and futures Spot del. Kwinana (LHS) CBOT Wheat Mar-16 (RHS) WA canola price - spot and futures SA canola price - spot and futures Spot del. Kwinana (LHS) ICE Canola Jan-16 (RHS) Data: Profarmer Current price as at 23 October 215 October 214 Five-year average 8th percentile 2th percentile Wheat $/t Barley $/t Canola $/t Financial performance Index of interest costs, land and improvements value and equity ratio (1999/=1) Farm cash income 7, Average average $ per farm 6,,,, 2, 1, - Interest paid Value of land and fixed improvements Equity ratio Data: ABARES *Farm cash income is the difference between total cash receipts and total cash costs. Export performance 1,2 WA top three reported grain export markets 3% 1, 25% Australian dollars (millions) % 15% 1% 5% 212/13 213/14 214/15 212/13 213/14 214/15 212/13 213/14 214/15 Indonesia Japan South Korea Indonesia Japan South Korea 214/15 Export Share % Oats Rice Sorghum Barley Rye Canola Wheat export share (RHS) Data: GTIS

16 (July 3rd) July 215 Yearling Steers (c/kg lwt) EYCI (c/kg cwt) Trade Lamb ($/head) NTLI (c/kg cwt) Data source: MLA & RBA Contact details are on page 2. course of the 214/15 year. historically. Prices This Time Last Year Yearling steers Victoria Jan Feb Mar Apr May Jun Jul Aug Oct Nov Dec 5 Year Average Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Sep Eastern young cattle indicator Current This Time Price (June 1st) Last Year Prices 1,7 1,6 1, 1, 1, 1,2 1,1 1, 9 8 1,2 1,1 1, th Percentile 5 Year Average Current Price (7 th July) 2 th Percentile 6 Jan Feb Mar Apr Jan Feb Mar Apr May Jun Jul 8 th Percentile Trade lamb Victoria Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec May Jun Jul Aug Sep Oct Nov Dec 2 th Percentile Aug National trade lamb indicator Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec This Time Last Year Year Average 1, 1, 1, 1, 1, 1, 1,2 1,15 1,1 1, , Sep Oct Nov Dec Jan Feb Mar Apr Jun Jul Aug Sep Oct Nov Dec 8 th Percentile May 2 th Percentile Ewes Wethers Three per cent No change to tariff on barley and trading conditions sorghum removed for rice, sugar, wheat immediately. and cotton. All tariffs eliminated within four years. your legal and/or tax professional. Includes abalone, rock lobsters, prawns, scallops and oysters. 15 per cent tariff on infant milk forumla phased out over four years. The 14 to 3 per cent tariffs will go within four years. Dairy tariffs phased out over 11 years. A fairer go for farmers to: All tariffs on horticultural products eliminated within four years. Sheep meat tariff of 23 per cent phased out over eight years. cent phased out over nine years. Live animal tariffs of 1 per cent phased out over four years. Building Double Farm Management Deposits (FMDs) to $8, Opt back into income tax averaging after 1 years phased out over seven years. P Offset FMDs against a business loan Deduct the cost of new fencing in the year of purchase $m in Drought for the next 11 years Infrastructure Fund Subscribe to Ag Answers NATIONAL CROP UPDATE NOV 214 NATIONAL BEEF UPDATE MAY 215NATIONAL SHEEP & WOOL UPDATE JULY 215 VICTORIAN FARMLAND VALUES INDEX 214 VOLUME 2 APRIL 215 WESTERN AUSTRALIAN FARMLAND VALUES INDEX 214 VOLUME 1 MAY 215 July 215 Wheat futures took off last week pulling local prices higher too amid concern about global wheat production this year. APW1 wheat delivered Geelong rose 8.8% during June. Canola prices also jumped in June recovering to levels not seen since April 214. Canola delivered Geelong rose 8.% during June. The Bureau reported a strengthening of the 215 El Niño in June. Even so, the impact on Victorian croppers is hard to predict as the effect is not uniform across the state. While reduced rainfall is commonly associated with El Niño events, it will be the timing of rainfall that is critical. Prices Wheat - spot & futures cents per kilo lwt Spot del. Geelong (LHS) CBOT - Mar 16 (RHS) Barley - spot del. Geelong cents per kilo cwt Current Price Wheat (APW) $313 $27 $272 $298 $24 Canola $545 $56 $524 $559 $485 Barley (GA1)* $317 $258 $264 $291 $245 AUD / USD Lentils* $1,226 $656 $72 $897 $496 Data source: Profarmer, RBA, Barchart, The Weekly Times *only 2 years of price data for barley & lentils Rural Finance and Rural Bank are pleased to deliver Livestock Farm Monitor again in 215. Data collection is starting now so if you would like to participate please contact your relationship manager or Ag Answers directly. Cattle prices had another good month to close the financial year, up a further 9.2% for June and 55% over the While sheep prices have not seen the same growth as cattle prices this year, sheep prices remain very strong cents per kg clean July 215 Canola - spot & futures cents per kg clean Spot del. Geelong (LHS) ICE Canola Jan-16 (RHS) Lentils - spot del. Elmore AUD/USD Wool prices continue to push higher on the back of strong export volumes. Monthly Victorian wool exports to China were up 39% in May 215 compared to May 214 for <19 micron wool. The price of fine wool 17µ is up 3% on this time last year, medium wool 2µ is up 24.5% and broad wool 26µ is up 35.8%. Livestock Farm Monitor 215 will begin next month. Livestock Farm Monitor is a benchmarking tool for wool, beef and lamb producers across Victoria. It is free to participate, with expert assistance through the whole process. To get involved contact your local Rural Finance or Rural Bank office or Ag Answers direct (details over page). cents per kilo cwt $/head Fine Wool - 17 Micron Broad Wool - 26 Micron Fine Wool - 17µ 1,495 1,223 1,495 1,679 1,268 Medium Wool - 2µ 1,321 1,129 1,2 1,336 1,95 Broad Wool - 26µ 1, Ewes ($/head)* Wethers ($/head)* Barley (feed)$/t AUD/USD Data source: Elders, MLA, Profarmer & RBA * 2 year average C$/tonne Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 cents per kg clean Medium Wool - 2 Micron Apr-15 Jun-15 May-15 Jul-15 $ / head Ewes and Wethers CHINA-AUSTRALIA FREE TRADE AGREEMENT NOVEMBER 214 The Australian Government has signed a Free Trade Agreement (FTA) with China that will see tariff reductions across the economy including for grain, dairy, wine, livestock, seafood and horticultural products. The China Australia FTA (ChAFTA) is the third FTA to be concluded this year after deals were struck with Korea in February and Japan in July. In this year alone Australia has concluded FTAs with Asia s three largest economies. ChAFTA will help Australian food and fibre exporters compete in China with products from New Zealand that already benefit from the 28 New Zealand China Free Trade Agreement (NZCFTA). Impact on Australian Agriculture Tariffs on skins, hides and leather of up to 14 per cent ChAFTA includes provisions for foreign investment. The threshold for screening by the Foreign Investment Review Board (FIRB) has been raised to $1.8B to match the threshold given to the US, Japan and Korea. For agricultural investments, the threshold for screening by FIRB is $15M for rural land and $53M for agribusiness. This is consistent with the Korea and Japan FTAs. Investments by State-Owned Enterprises will still require FIRB approval regardless of the size of investment. Signing of ChAFTA is the first step. The agreement is expected to be finalised in the coming months and will then need to be ratified by the Australian Parliament. The information herein is believed to be reliable and has been obtained from public sources believed to be reliable. Rural Bank and Rural Finance make no representation as to the accuracy or completeness of such information. Opinions, estimates and projections in this report constitute the current judgement of the author as of the date of this report. They do not necessarily refl ect the opinions of Rural Bank and Rural Finance and are subject to change without notice. Rural Bank and Rural Finance has no obligation to update, modify or amend this report or to otherwise notify a recipient thereof in the event that any opinion, forecast or estimate set forth herein, changes or subsequently becomes inaccurate. This report is provided for informational purposes only and should not be relied upon without consulting Copyright Rural Bank Ltd ABN AFSL/Australian Credit Licence and Rural Finance a Division of Bendigo and Adelaide Bank Ltd ABN AFSL/Australian Credit Licence AGRICULTURAL COMPETITIVENESS WHITE PAPER KEY HIGHLIGHTS On 4 July 215, Prime Minister Tony Abbott and Agriculture Minister Barnaby Joyce, launched the Commonwealth s Agricultural Competitiveness White Paper on a farm near Warrnambool in south west Victoria. The much anticipated paper is the result of years of industry consultation and sets out real actions for Australian agriculture for the next decade. Stronger farmers, stronger economy Vision: To build a more profitable, more resilient and more sustainable agriculture sector to help drive a stronger Australian economy. Five priority areas: farm businesses Beef tariffs of up to 25 per What would this practically mean for Australian farmers: An updated tax system that allows the infrastructure of the 21st century What the rule changes to Farm Management Deposits would mean for farmers: New rules designed to help manage variable and volatile cash-flows in a farming business and ensure taxes are lower, simpler and fairer for our farmers and all Australians. 1. The limit of FMDs increased to $8, to provide greater ability to smooth profits across seasons and manage tax liabilities more proactively E ag.answers@ruralfinance.com.au W ruralfinance.com.au Strengthening our Farming smarter approach to drought and risk management Concessional Loans each year Accessing premium markets $m for a National Water 2. Ability to use FMD balances as an offset against bank loans, therefore reducing interest costs Visit or P ruralbank.com.au P ruralfinance.com.au