The drought we are in will take more than a few weeks of rain to fix. Just because the grass turns green things don't instantly go back to normal, milk supply will go up due to cows being able to eat more again but grain and other feed prices will still remain high for some time. Many farms have sold stock to reduce exposure to try to ride it out, these farmers won't have the cash to buy stock again straight away, plus what stock is available will be at a premium price.
I feel 2 things will happen soon, the government will step in to assist farmers most probably with interest free grants for equipment, tax incentives for produce and capital purchases. Already they are offering 25% rebates on irrigation equipment and infrastructure.
The second thing will be BGA hitting 3.80 or lower, they are still very exposed to the drought conditions, diversification into other markets has helped shelter the exposure but it still exists and isn't getting better anytime soon.
BGA Price at posting:
$4.24 Sentiment: None Disclosure: Not Held
