Westpac Regional Economic Report Volume Two 2009 Edition
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Highlights
The global recession is translating into weaker demand for agricultural commodities and placing downward pressure on prices. These forces intensified in 2008 and were evident early in 2009. As for the individual agricultural markets, differing supply conditions and demand sensitivities to the global recession remain a key source of distinction.
Encouragingly, there was a change of mood in March, an air of optimism swept across global markets. Investors began to ask: is the economic recovery in view? In light of this, agricultural prices, which had been generally trending lower through February, showed some reversal.
However, history shows that recoveries from financial crisis are typically gradual. That suggests a sustained and significant upswing in global commodity prices is still a little way off.
Conditions in the Australian farm sector are generally on the improve in 2008/09. That is in stark contrast to the non-farm sector which has been in recession since mid-2008. Improved seasonal conditions have triggered a sharp recovery in farm output. The financial performance of broadacre and dairy farms strengthened in 2007/08, from a record low in 2006/07, and a further improvement is expected in 2008/09. However, disparities in financial performance are evident across the regions – with WA, northern NSW and Qld faring better.
Also, in this edition of the Regional Economic Report we focus on the beef industry. The feature article takes a longer term perspective. A key global trend is the urbanisation of China and India. This profound population shift has global implications, including for the production and consumption of commodities. The beef industry is no exception, particularly as China is the world's largest consumer and producer of meat. Past episodes of rapid urbanisation have triggered upswings in beef prices. Our analysis suggests that beef prices are set for a longer-term upswing.
The report is available below in both PDF and RTF formats. Access previous issues in our archives.
Background information on this report can be found at the bottom of this page.
To provide economic insight and forecasts into key industries focusing on commodity prices and financial indicators relevant to regional Australia, including an outlook on interest rates and the Australian dollar.
Author
The report is produced by Westpac. Its editor is Justin Smirk, Westpac Senior Agribusiness Economist.
Frequency
Quarterly
Data Source
Data is collected from various sources with all forecasts and commentary provided by Westpac's specialist economic team