As the Westpac-NFF Commodity Index regularly demonstrates, global markets are extremely sensitive, given the delicate balance of supply and demand, especially for agricultural goods.

“Be it floods in Iowa, export tariffs on food in Argentina or aggressive biofuels policies in Europe and the United States, today’s global markets respond in real time,” Westpac Senior Agribusiness Economist, Justin Smirk, said.

“Actions, events and seasonal conditions in Australia, and their impact on our farm sector, are no different, reverberating throughout global markets.

"For example, the wheat futures traded on the Chicago Board of Trade respond as quickly to Australian weather reports or ABARE production forecasts as they do to any change in US policy on ethanol.

“In such a volatile environment, markets are closely watching the complex matrix problem of climate change, its potential impact on global farm output, and the policies being proposed to mitigate global warming emissions.”

NFF Vice-President Charles Burke agrees: “Rarely do Government’s pursue policies with such broad reaching ramifications and complexity.

"It must be recognised that Australian farmer’s input costs – fuel, electricity, fertiliser, chemicals, etc. – may increase regardless its level of involvement within any Australian ETS.

“If we don’t get the settings right, this could become a new and additional factor putting pressure on global markets, effecting both supply and prices in Australia.

"Australian farmers would be concerned if the global market’s response following the Government’s decision on the ETS design leads to a noticeable hike in global food and fibre prices – suggesting that Australian farmer’s position in the international marketplace has been affected,” Mr Burke said.

Compared with the previous month, global prices in June increased for Barley (0.1pc), Wheat (8.7pc), Cotton (0.2pc), Canola (5.1pc), and Dairy (2.2pc). Commodities experiencing prices decreases during the month were Beef (-0.3pc), Sugar (-0.2pc), and Wool (-1.0pc).

The overall weighted index increased by 0.1pc during June, and is now 10.9pc above year-ago levels.