Rabobank chief executive Todd Charteris spoke to The Country's Jamie Mackay about the bank's latest Agribusiness Monthly Report.
Mackay took a look at Rabobank's summary on each of the sectors, and Charteris gave his thoughts on the outcomes.
Dairy Rabobank: Robust Chinese demand was underpinningOceania prices - but this also presented a downside risk with elevated stocks and growing milk supplies.
Charteris: "Pretty strong demand and certainly confidence in this season's milk price is rising all the time."
Beef Rabobank: Rabobank expected farmgate prices to soften over the coming months as supplies started lifting against the backdrop of weakening returns for manufacturing beef from the US market.
Charteris: "Our research suggests that we see a downside risk in prices. That's due to a couple of things, an increase in local supply in the New Zealand market, and also weakening returns in that manufacturing beef market in the US ... so we are expecting to see some local softening of prices in the New Zealand market."
Sheepmeat Rabobank: Prices will come under normal downward pressure as new season lamb supplies started increasing. However, improving market signals indicated a likely easing of prices rather than a sharp correction.
Charteris: "Certainly in September we've seen foodservice, particularly in China, almost come back to those pre-Covid levels. The strengthening in food service, certainly food retail prices, continue to be strong and so we're not really expecting what we would call a price correction in sheepmeat. More an easing of pricing - which is seasonal.
Horticulture Rabobank: China's fresh produce imports have flatlined in 2020, but Rabobank expected a return to growth in 2021.
Charteris: "In horticulture we're seeing a flatline going on there in terms of flows into the market, but generally speaking I still think things look pretty positive."
Farm inputs Rabobank: Despite global prices of DAP and urea modestly appreciating during October, Rabobank still expected that the impact of low demand and strong supply capacity would take global benchmarks lower during Q4.
Charteris: "That's really around impacts of low demand and strong supply in the market place. So we think a pretty bearish outlook continues, certainly for fertiliser, which will be good for our local farmers."
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Oil Rabobank: Rabobank saw scope for spot crude oil prices to increase modestly in the short term. It expected Brent Crude would reach USD 43/bbl during Q4, before appreciating to USD 45.50/bbl during Q2 2021.
Charteris: "Another low input price and again, same sort of thing [as fertiliser] driven by those wider global economic drivers so we do see some encouraging signs there - so that's positive."
FX Rabobank: The strong recovery in the Chinese economy was trimming the downside for the NZD. Rabobank expected to see it trough at USc 64 by April 2021.
Charteris: "A lot depends on the exchange rate obviously and that continues to be volatile so we need to continue to keep a close eye on that."
