Rural Bank has released its February insights

Rural Bank analysts have released their February insights to various agricultural industries, and say the world is waiting to see what happens to the wool market, in the midst of tariff negotiations between the US and China.

“A trade war between China and the US has the potential to seriously impact the Chinese economy, which would limit upside in wool prices in 2025,” said Bendigo Bank agricultural analyst Joe Boyle.

Mr Boyle said the Australian wool market has firmed at the start of 2025 with prices adjusting to the weaker Australian Dollar. The AWEX EMI is up 61 cents since the Christmas recess.

“Prices are forecast to be relatively steady with participants expected to take a cautious approach in the current trade environment,” Mr Boyle said.

“The weaker Australian Dollar has been the main supporter of the market. The fine micron wools have all firmed since the recess, although to a lesser extent than the broader merino fleece types and the crossbred wools.”

He also said the Australian lamb market is expected to be relatively steady in February. 

“The market will gain support from continued high processing rates, although strong supply of lambs and dry conditions in key growing areas will limit upside”.

Lamb prices have eased to start 2025 after peaking just prior to the Christmas break. The National Trade Lamb Indicator (NTLI) reached above 900 c/kg in December but has eased back to around 770 c/kg. Even so, the NTLI remains 1.2 per cent higher than the five-year average.

“Processing rates have continued at heightened levels in 2025. Sheep and lamb processing rates took only two full processing weeks to climb back above the 700 thousand-head combined slaughter mark. 

“There were reports that processors were well booked out in January, which has seen some weakness in prices.”

“Mutton markets started 2025 with a bang but have since dropped to below pre-Christmas levels, to around 370 c/kg. This marks a 21.8 per cent increase year-on-year but still trails 20.3 per cent below the five-year average.”

Fello analyst Rod Baker said he expects export demand for Australian wheat to pick up.

“Competitive Australian pricing, tightening global wheat stocks and renewed buying interest from key markets drive stronger trade flows in the coming months,” Mr Baker said.

The 2024/25 winter crop harvest is complete to a final production total of 57.7 million tonnes, which was higher than expected. Jointly, Western Australia and NSW accounted for 71 percent of total production. Big drops in production were seen South Australia and Victoria, which is at its lowest since the 2018/19 drought.