Australia Agribusiness Report Q4 2012Published by: Business Monitor International Published: Oct. 17, 2012 - 79 Pages Table of Contents
AbstractBMI View: The Australian agriculture sector is expected to remain buoyant in 2012/13, largelysupported by export demand from Asia and higher prices for grains and oilseeds. On average, farmexports are forecast to reach AUD35.2b n, which is significantly higher than the five-year average ofAUD28.4bn in the drought affected years of 2005/06-2010/11. Crop exports are expected to outperformlivestock as demand slows due to higher prices and greater price sensitivity for those products.Key Forecasts Beef production growth to 2016: 6.7% to 2.28mn tonnes. We expect Australia to remain astrong exporter of the meat over the long term despite growing competition from the US. Sugar production growth to 2015/16: 43.9% to 5.2mn tonnes. Industry consolidation willencourage economies of scale and should boost output over the forecast period. Milk production growth to 2015/16: 5.0% to 9.95mn tonnes. Improved economies of scale willsupport the growth of milk production to meet growing export demand. 2012 real GDP growth: 2.1%, which is same as 2011. Forecast to average 2.2% from 2011 to2016. 2012 consumer price index: 1.0%, down from 3.1% in 2011. Forecast to average 2.4% from2011 to 2016. 2012 central bank policy rate (average): 3.0%, down from 4.25% in 2011. Predicted toaverage 4.2% from 2011 to 2016. Industry Developments An update of the February-March Dairy Farmer Survey in August 2012 found a sharp drop of 13% indairy farmers’ positive sentiment about the industry. Only 53% of farmers were upbeat about the dairyindustry’s prospects in the near future. The regions where farmers’ confidence decreased most were inNew South Wales, Queensland and Tasmania, where herd yields have declined by about 3.7%. The Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) forecast beefexports to the US in 2012/13 to grow by 5% year-on-year (y-o-y) to 215,000 tonnes due to tighter beefsupplies. While imports to the mainstay markets of Japan and South Korea (where exports are forecast tofall by 9% to 112,000 tonnes) are expected to slow, shipments to other Asian emerging markets areexpected to rise by 3% overall to 313,000 tonnes. Despite the drop in production, wheat exports should remain relatively strong at 21.0mn tonnes in2012/13, down by 12.5% y-o-y but well above the 10-year average of 14.6mn tonnes. More specifically,Australia is likely to export significant amounts of feed wheat as demand for this lower-quality grade hassurged as a result of strong global feed grain prices. Australia has significant stocks of feed wheat afterthe last two harvests were affected by floods and yielded high quantities of low-quality grain. China couldimport up to 4mn tonnes of feed wheat in 2012/13, with the majority anticipated to come from Australia,according to industry sources. Australia remains a small player in the world ethanol market, producing only 0.4% of global ethanolproduction in 2010. This is extremely low compared with 47.8% from the US and 28.4% from Brazil thatyear, as well as 13.4% from Europe. In Asia, even Thailand and Indonesia had a similar or larger sharesof global production (1.0% and 0.4% respectively). Ethanol production in Australia is forecast to reach440mn litres in 2012, about the same as in 2011. The country’s ethanol production has grown by anannual average of 43.3% since 2007 following the announcement of the government’s Cleaner Fuels forAustralia policy in 2001. Australia’s ethanol consumption is largely equal to production. We do notexpect tremendous growth in demand as long as pressure to raise the ethanol blend at the state level is notapplied. Moreover, only E10 is available in the country (flexible E85 vehicles have been available formany years in Europe and the US) and domestic gasoline prices have come down from their highs,discouraging ethanol demand. Get full details about this report >> |
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