OREANDA-NEWS. National Australia Bank (NAB) Agribusiness has revised its Australian dollar (AUD) forecasts down with the AUD expected to fall to 72 US cents at the end of 2015 (previously 74 US cents) and bottom out at 71 US cents in early 2016, 2 cents below previous forecasts.

General Manager of NAB Agribusiness Khan Horne said the disruption in Greece and more importantly the weaker Chinese equity markets of late have contributed to the resumption in the downward trajectory of the AUD.

“The weaker currency is providing important support to local prices and we expect it will continue to weaken through until early next year, which is good news for our export oriented industries,” said Mr Horne.

“NAB has adjusted its NAB’s 2015-16 price forecasts in light of the revised AUD forecast, with upward revisions to wheat, sugar and cotton prices.”

NAB’s average price outlook for wheat is 5.9 per cent higher than last year AUD306.24/tonne (up from 3.4 per cent), cotton is up 12 per cent to AUD2125.20/tonne (up from 9.3 per cent) and sugar has improved from 3.8 per cent decline to 1.4 per cent decline to sit at AUD378.24/tonne.

“On interest rates, we still see the Reserve Bank as having finished cutting. We see the next move in rates as up but not until late 2016, and with a lower end point for the official cash rate of 3.5 per cent.

“The NAB Rural Commodities Index was steady in June – up 0.2 per cent in AUD terms but down 0.9 per cent in USD terms. The neutral result in AUD terms largely reflects higher grain and protein prices offset by sharply lower fruit, vegetable and to a lesser degree sugar prices.”

NAB welcomes the announcement yesterday by the Minister for Agriculture Barnaby Joyce on the opening of the live cattle trade to China.

“This deal has the potential to provide unprecedented support to the beef industry and inject real investment into the sector, which is good news for Australian producers. Our Asia Desk will be working closely with customers to identify opportunities and provide support into this new market,” said Mr Horne.

NAB’s Rural Commodities Index includes 28 commodities (wheat, barley, sorghum, rice, oats, canola, chick peas, field peas, lupins, wool, cotton, sugar, wine grapes, beef, lamb, pork, poultry, dairy, apples, bananas, oranges, mangoes, strawberries, broccoli, carrots, lettuce, potatoes and tomatoes). The index is weighted annually according to the gross value of production of each industry in Australia.