NAB says Australia ‘can cope’ as coronavirus panic buying spikes food consumption

COVID-19 is wreaking havoc around the world, but there’s no real disruptions to Australia’s food supply, says NAB.

Significant rain over NSW and Queensland has seen feed prices trend lower this year. Picture: AAP

Agricultural economists at NAB say Australia is well positioned to cope with the increased demand in domestic food consumption induced by the coronavirus panic buying.

NAB’s Rural Commodities Index has surged by 8.5 per cent over the month February, prompting agribusiness researchers to believe the country is well positioned in terms of food security to deal with the COVID-19 pandemic.

The latest monthly index report, released on Tuesday, noted the short-term outlook is for a rise in domestic consumption demand, while export opportunities are likely to be potentially limited.

NAB agribusiness economist Phin Ziebell said Australia’s position as a net exporter has produced roughly enough food for 60 to 75 million people.

“There’s no doubt COVID-19 is wreaking havoc around the world, but at this point we haven’t seen any real disruptions to Australian food supply beyond panic-buying in supermarkets,” Mr Ziebell said.

“Domestically, panic buying will bring forward demand for most agricultural products, with the exception of some speciality products destined for restaurants which will likely be in surplus.”

Despite a challenging 2019 food harvesting season, the monthly index report noted grain storage, livestock and fruit and vegetable sectors remain readily available.

Mr Ziebell said a weakening Australian dollar usually presents an attractive outlook for agricultural exporters, but uncertainty surrounding overseas trading networks may result in little export opportunity.

“At the same time, the AUD has collapsed to sit between 57-58 US cents, which is good news for exporters, but only to the extent that global trade flows can continue in the face of the virus threat,” Mr Ziebell said.

Ongoing travel restrictions could likely impact seasonal overseas workers for horticultural and livestock processing, prompting the report to warn of potential labour shortages.

It also noted the virus could impact the imports of overseas chemicals and fertiliser to the industry, which could impact overall yields generated in 2020.

Significant rain over NSW and Queensland has seen feed prices trend lower this year, with NAB expecting the downward pattern to continue, despite a lower AUD environment and increased domestic consumption.

The Eastern Young Cattle Indicator (EYCI) has fallen back slightly from its recent record of 747 cents per kilogram to now sit at 742 cents per kilo.

“COVID-19 concerns for export markets and a lack of rain over the past fortnight suggests a downside risk for the EYCI,” Mr Ziebell said.

“Likewise, lamb prices look to have peaked for now, with the National Trade Lamb Indicator sitting at 923 cents per kilogram. Wool prices have held up, but demand is very uncertain in the current environment.”

Dairy export prices also remain uncertain due to the virus impacting China, a major buyer, while cotton prices remain resilient, the report said.