Navigating 2024: An outlook for agricultural markets

As we stand on the cusp of 2024, analysis of key agricultural sectors, including grain and oilseed markets, Merino wool, lamb, and cattle, reveals a complex landscape shaped by a myriad of factors.  Mecardo’s latest analysis takes a look into the crystal ball of what 2024 might hold for growers.

1. Grain and Oilseed Markets: 

The grain and oilseed markets have experienced a year of relatively consistent price declines, following record levels driven by geopolitical factors. In 2023, volatility remained a feature, with sporadic spikes in response to concerns about commodity movement from the Black Sea. Notably, wheat prices have trended downward, despite supply fundamentals suggesting potential support. 

Forecasts for robust corn production in North and South America have kept grain prices in check. Canola prices, influenced by soybeans, have remained relatively strong. However, local dynamics, such as post-harvest price improvements and weather patterns, will play a crucial role in shaping market trajectories in 2024. 

For a more detailed outlook on grain and oilseed market, take a look at Mecardo’s article here.  

2. Merino Wool Supply in 2024: 

The impact of a dry spring in 2023 on Merino wool supply becomes evident in projections for 2024. The dry conditions have led to a forecasted decline in Merino fiber diameter, affecting both quality and quantity. The correlation between changes in rainfall and Merino micron suggests a potential fall in micron by around 0.4 to 0.6, akin to similar cycles in previous years. 

This shift has implications for the supply of fine and broad Merino micron categories. While 16 micron and finer wool supply is expected to be ample, constraints in the 19 micron and broader categories may support broader Merino prices while applying downward pressure on fine Merino premiums. 

For a more detailed outlook on wool market, take a look at Mecardo’s article here. 

3. Lamb Markets in 2024: 

The lamb market, having experienced a challenging 2023 with significant declines, is poised for potential recovery in 2024. The supply of lambs, influenced by flock size and marking rates, will play a pivotal role. A decline in flock size this season is likely to support a positive shift in lamb markets. While prices may not fully return to previous highs, a more balanced alignment of supply and demand in 2024 could drive a 50% retracement of 2023 falls, with the Eastern States Trade Lamb Indicator potentially averaging around 625¢/kg cwt. 

Mutton prices are a long way from previous peaks but are likely to experience improvement from the lows of the past year. 
For a more detailed outlook on lamb market, take a look at Mecardo’s article here

4. Cattle Markets in 2024: 

The cattle market, which experienced a downward spiral in prices, has seen a recent reversal with a notable upward spike. Recent rainfall events have provided producers with more options and confidence, leading to increased yardings and positive market sentiment. 

While the female slaughter rate has surpassed the herd liquidation marker, it hasn't skyrocketed as in previous droughts, indicating better resilience among producers. The outlook for 2024 suggests a continuation of the current positive trajectory in cattle prices, albeit at a slower pace. Global factors, including trade relations, lower production in the US  and beef inventories, are expected to contribute to more market stability. 

For a more detailed outlook on cattle market, take a look at Mecardo’s article here. 

2024 will present a dynamic landscape for agricultural markets. Factors such as weather conditions, geopolitical influences, and global trade dynamics will continue to shape the trajectory of grain, oilseed, wool, lamb, and cattle markets. Farmers and growers as always will need to adapt to changing conditions, and leverage opportunities for sustainable growth.