The positive outlook is thanks to recent rainfalls across much of Australia’s key cropping areas increasing farm production forecasts. Combined with lower input costs, this is expected to offset the anticipated 7 per cent fall in rural commodity prices.

NAB’s general manager for agribusiness, Khan Horne, said that the season is also off to a good start for livestock producers.

“Saleyard prices are strong – and are expected to remain that way for the next few months – with lamb reaching its highest monthly average price since July 2004, and the eastern young cattle indicator up 6 per cent in June, to average 331c/kg.”

The July report features grain as the ‘Commodity in focus’, with the current forecast looking the most positive in recent years for many crops.

“Reports from our bankers on the ground in South Australia, Victoria, New South Wales and Queensland indicate a great start to the season in many areas with some bankers reporting that conditions for this time of year are the best for a number of years,” Mr Horne said.

“With many farmers able to get their crops planted in the optimal window this year, combined with the good follow up rainfall farmers are feeling positive about their yield prospects.

“While grain markets have weakened slightly over recent weeks due to increased certainty around the Northern Hemisphere crop, higher yields this year should offset this to result in increased farm incomes,” Mr Horne said.

* The Commodities Wrap is available from NAB Agribusiness Bankers or via NAB Agribusiness