NATIONAL Australia Bank has revised its A$ forecasts down, with the currency expected to fall to US72c at the end of 2015 – 2c lower than previously forecast – and tipped to bottom-out at US71c in early 2016.

The A$ fell to US73.71c in trading yesterday, before opening this morning a little higher at 74.23c.

NAB Agribusiness general manager Khan Horne said the disruptions in Greece and more importantly the weaker Chinese equity markets of late had contributed to the resumption in the downward trajectory of the A$.

“The weaker currency is providing important support to local prices and we expect it will continue to weaken through until early next year, which is good news for our export-oriented industries,” he said.

NAB has adjusted its 2015-16 commodity price forecasts in light of the revised A$ forecast, with upward revisions to beef, wheat, sugar and cotton prices.

NAB’s average price outlook for beef is 25.9pc higher than last year; wheat is 5.9pc higher at A$306/tonne (up from 3.4pc) and cotton is up 12pc to A$ 2125/t (up from 9.3pc).

“Upward momentum in Australian cattle markets continues virtually unabated,” NAB’s latest July Commodities Wrap says. “The Eastern Young Cattle Indicator is well into record territory and now stands at approaching 540c/kg, boosted by strong feedlot demand as the US continues to sate its appetite for beef through higher imports from Australia.”

“Overall, the EYCI index was up 3.4pc in June. While Indonesia’s surprise quota cut for Australian live cattle will cause some disruption, the industry fundamentals remain strong with unfavourable weather remaining the biggest risk to the outlook,” the Commodity Wrap says.

On interest rates, Mr Horne said NAB still saw the Reserve Bank as having finished cutting.

“We see the next move in rates as up, but not until late 2016, and with a lower end-point for the official cash rate of 3.5pc,” he said.

The NAB Rural Commodities Index, covering a basket of 28 commodities, was steady in June – up 0.2pc in A$ terms but down 0.9pc in US$ terms due to currency movement. The neutral result in A$ terms largely reflected higher grain and meat protein prices offset by sharply lower fruit, vegetable and to a lesser degree sugar prices.

China deal injects investor confidence

NAB welcomed Monday’s announcement by Agriculture Minister Barnaby Joyce on the opening of the live cattle trade to China.

“This deal has the potential to provide unprecedented support to the beef industry and inject real investment into the sector, which is good news for Australian producers. Our Asia Desk will be working closely with customers to identify opportunities and provide support into this new market,” Mr Horne said.