Business research

NAB Rural Commodities Wrap: February 2022

As agriculture’s record run continues, what’s in store for 2022.


The new year has been good (mostly good) for Australian agriculture as a whole. Prices are generally very high and seasonal conditions are wetter than average.

The La Nina event, ongoing since last November, is now at or near its peak, bringing monsoon conditions to Victoria, South Australia and New South Wales. While central Queensland has been much drier than average recently, the seasonal situation continues to put a floor under already high cattle prices. Consistent with a La Nina event, Western Australia experienced a drier than average summer. While the three-month outlook for the fall remains average to wetter than average in most regions, it will be difficult to see a season as good as the previous two records. This has potential implications for grain production and livestock prices.

the NAB index of rural products rose 0.7% on a monthly basis in January – its tenth consecutive gain to another record high. The index is now 22% higher than the same period in 2021.

Rising oil and gas prices continue to affect agricultural inputs, especially fertilizers. While USD-denominated DAP and urea prices fell slightly in January, they have increased by 273% and 311% respectively since the start of the pandemic in January 2020. This is clearly a global challenge. which could have wider implications for crop production and profitability in 2022.

The AUD is trading around 70 US cents, after briefly breaking below 70 late last month. Expectations of imminent US rate hikes, geopolitical concerns (notably Ukraine) and a general lack of risk sentiment amid equity market weakness boosted the USD. We now see RBA rates rising in November this year, with follow-ups in December 2022 and February 2023, taking the cash rate to 0.75% in just over a year.

For more details, see the February 2022 rural product summary