September 2, 2025 • 5 mins
Rabobank’s senior agriculture analyst previews the September Agribusiness Report - Surging Prices for Spring 2025. But does that apply to today’s falling dairy market? And how many more cuts can we expect to the OCR?
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Episode Transcript
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Speaker 1 (00:00):
It is hot off the press, so hot it's burning
my fingers and so hot. I haven't even had time
to read it thoroughly, but I'll wing it because that's
what you have to do with live radio. It is
the Rabobank September Agribusiness Report. One of the authors is
Emma Higgins, senior AG analyst, and Emma, I just want
to start before we talk about that, and we've already
(00:22):
talked to Richard Allen obviously from Fonterra. Are you surprised
by that big drop overnight?
Speaker 2 (00:28):
Not particularly just in the sense that right now, Jamie,
we're in a really critical part of the season, as
every farmer will know out there, whether it's theory or
whether it's actually what's happening in the sheep and beef
space where you know, we're starting to hit our straps
when it comes to milk production, or we're starting to
see lambs drop on the ground, and weather is such
(00:48):
a critical situation. But also as part of that, overall
supply volumes are really critical for the GDT right now.
So what we've seen is volumes start to lift is
what normally happens at this stage, and it's testing demand
a little bit as we speak, so not super surprised.
I think that we're likely to see record production volumes
(01:11):
this year. I've been talking about this for a while.
I think we're likely to see growth of about two percent,
and we're likely to have new records. So we'll just
see how things go in the short term. And going
back to my earlier weather comment, a lot of that
two percent forecast will be underpinned by the weather that
may or may not happen and the next sort of
six weeks or so.
Speaker 1 (01:31):
Yes, And that's like trying to pick your nose, isn't
it very difficult? Well, actually, not picking your nose is
easier than picking the weather radio. When we look at
the commodity outlooks, we've kind of covered off dry. It's
not unusual, as we discussed with Richard Allen, to have
seasonal drops at this time of the year. One thing
or one segment or sector that seems to be defying gravity,
(01:51):
as beef.
Speaker 2 (01:52):
Sawing to new heights. Really is the scene there for beef,
and look, it's actually a similar situation for sheep. We
can get to that. But look, what we're seeing is
a record prices for this time of the year. It
is great news for our beef farmers. A lot of
it comes down to a supply story along with the
(02:12):
demand story that we've been talking about for a long
time now our of the US, but locally we've got
less kettle around and then globally it's a similar story
as well. So excellent news. And you know, the chances
of elevated prices continuing to hold are certainly quite sound
in the short term. Again, we're waiting to see what
(02:32):
happens in the short term when it comes to weather,
but things are looking good on that front.
Speaker 1 (02:37):
Is it ditto for sheep meat?
Speaker 2 (02:40):
Yeah, she made us very interesting because we've seen the
average farm gate prices hit ten bucks for the first
time in August. That is forty percent higher than this
time last year. Similar around the drivers, right, so we've
got tight supply of lambs, particularly with the challenges that
Southland had this time last year, which has resulted in
(03:02):
a decline of over a million head of lamb, like
one point two million head of lamb short when it
comes to processing. So ultimately China are paying more over
the last quarter, which is great news, but it really
is at northern hemisphest three around strong demand coming from
the EU also the UK mixed with that type of play.
Speaker 1 (03:23):
People can read your September agribusiness report on the website
rabobank dot co dot and said, but I just want
to touch on one more of your commodity outlooks, and
that is interested in exchange rates, particularly interest rates. I
was interested to hear Stephan Vogel out of your Australia
office last week saying or suggesting that Rabobank thinks there's
(03:44):
only one more cut coming to the ocr That's not
what the Reserve Bank signaled, Emma, No, it is.
Speaker 2 (03:51):
A little bit different. But you know what, we've always
marched to our own beat in terms of our forecaft.
We've for a long time talked about perhaps terminal rate
sitting around that three percent mark for a very long time.
We're there now. We've had multiple cuts already and that's
the reason that we have revised our forecast to expecting
one more cut at the November meeting. We've potentially got
(04:15):
a lot of stimulus to wash through the economy thanks
to those rate cuts that we've had so far. And
then on top of that, there's a lot of homeowners
out there that are going to be refixing, resetting their
mortgages and the next six months from July, so you know,
hopefully consumers out there New Zealand people out there will
(04:35):
have slightly more cash flow then maybe what's been suggested
out there. So let's hope that's the case. But we're
picking one more cut in November.
Speaker 1 (04:45):
Well, Emma Hagans, I hate to say this to your face,
but I hope you're wrong. I think the economy needs
an ocr at two and a half per seen And look.
Speaker 2 (04:55):
It's not the first time that I might have been
wrong as well. So look, we'll see when we next
catch up.
Speaker 1 (05:00):
Emma Higgins always got the chat on the country.
Speaker 2 (05:02):
Thanks so much, Jamie
It is hot off the press, so hot it's burning
my fingers and so hot. I haven't even had time
to read it thoroughly, but I'll wing it because that's
what you have to do with live radio. It is
the Rabobank September Agribusiness Report. One of the authors is
Emma Higgins, senior AG analyst, and Emma, I just want
to start before we talk about that, and we've already
(00:22):
talked to Richard Allen obviously from Fonterra. Are you surprised
by that big drop overnight?
Speaker 2 (00:28):
Not particularly just in the sense that right now, Jamie,
we're in a really critical part of the season, as
every farmer will know out there, whether it's theory or
whether it's actually what's happening in the sheep and beef
space where you know, we're starting to hit our straps
when it comes to milk production, or we're starting to
see lambs drop on the ground, and weather is such
(00:48):
a critical situation. But also as part of that, overall
supply volumes are really critical for the GDT right now.
So what we've seen is volumes start to lift is
what normally happens at this stage, and it's testing demand
a little bit as we speak, so not super surprised.
I think that we're likely to see record production volumes
(01:11):
this year. I've been talking about this for a while.
I think we're likely to see growth of about two percent,
and we're likely to have new records. So we'll just
see how things go in the short term. And going
back to my earlier weather comment, a lot of that
two percent forecast will be underpinned by the weather that
may or may not happen and the next sort of
six weeks or so.
Speaker 1 (01:31):
Yes, And that's like trying to pick your nose, isn't
it very difficult? Well, actually, not picking your nose is
easier than picking the weather radio. When we look at
the commodity outlooks, we've kind of covered off dry. It's
not unusual, as we discussed with Richard Allen, to have
seasonal drops at this time of the year. One thing
or one segment or sector that seems to be defying gravity,
(01:51):
as beef.
Speaker 2 (01:52):
Sawing to new heights. Really is the scene there for beef,
and look, it's actually a similar situation for sheep. We
can get to that. But look, what we're seeing is
a record prices for this time of the year. It
is great news for our beef farmers. A lot of
it comes down to a supply story along with the
(02:12):
demand story that we've been talking about for a long
time now our of the US, but locally we've got
less kettle around and then globally it's a similar story
as well. So excellent news. And you know, the chances
of elevated prices continuing to hold are certainly quite sound
in the short term. Again, we're waiting to see what
(02:32):
happens in the short term when it comes to weather,
but things are looking good on that front.
Speaker 1 (02:37):
Is it ditto for sheep meat?
Speaker 2 (02:40):
Yeah, she made us very interesting because we've seen the
average farm gate prices hit ten bucks for the first
time in August. That is forty percent higher than this
time last year. Similar around the drivers, right, so we've
got tight supply of lambs, particularly with the challenges that
Southland had this time last year, which has resulted in
(03:02):
a decline of over a million head of lamb, like
one point two million head of lamb short when it
comes to processing. So ultimately China are paying more over
the last quarter, which is great news, but it really
is at northern hemisphest three around strong demand coming from
the EU also the UK mixed with that type of play.
Speaker 1 (03:23):
People can read your September agribusiness report on the website
rabobank dot co dot and said, but I just want
to touch on one more of your commodity outlooks, and
that is interested in exchange rates, particularly interest rates. I
was interested to hear Stephan Vogel out of your Australia
office last week saying or suggesting that Rabobank thinks there's
(03:44):
only one more cut coming to the ocr That's not
what the Reserve Bank signaled, Emma, No, it is.
Speaker 2 (03:51):
A little bit different. But you know what, we've always
marched to our own beat in terms of our forecaft.
We've for a long time talked about perhaps terminal rate
sitting around that three percent mark for a very long time.
We're there now. We've had multiple cuts already and that's
the reason that we have revised our forecast to expecting
one more cut at the November meeting. We've potentially got
(04:15):
a lot of stimulus to wash through the economy thanks
to those rate cuts that we've had so far. And
then on top of that, there's a lot of homeowners
out there that are going to be refixing, resetting their
mortgages and the next six months from July, so you know,
hopefully consumers out there New Zealand people out there will
(04:35):
have slightly more cash flow then maybe what's been suggested
out there. So let's hope that's the case. But we're
picking one more cut in November.
Speaker 1 (04:45):
Well, Emma Hagans, I hate to say this to your face,
but I hope you're wrong. I think the economy needs
an ocr at two and a half per seen And look.
Speaker 2 (04:55):
It's not the first time that I might have been
wrong as well. So look, we'll see when we next
catch up.
Speaker 1 (05:00):
Emma Higgins always got the chat on the country.
Speaker 2 (05:02):
Thanks so much, Jamie
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