Australian commodity October update

Favourable seasonal conditions and spring rainfall are driving bumper harvest volumes and decade-high feed reserves across Victoria. However, rain-delayed harvesting and variable protein profiles have placed the spotlight squarely on quality risks, for both grain and hay. The rainfall all along the east coast has also supported cattle and lamb markets as restocking activity rises, while impacting fleece strength and weighing on wool values.

Ag sector outlook

• Cattle: Widespread rainfall across the northeastern Australian growing regions has pushed domestic young cattle prices higher, while heavy steer prices have also hit record levels.

• Cropping: Global wheat has shed its war premium. Southern bids followed it down; WA and the north held. With a large but uneven harvest, price will follow quality and location. Protein will pay, especially in the south.

• Dairy: While interest rate hikes continue to weigh on balance sheets, a rebound in seasonal conditions and decade high on-farm feed reserves are providing Victorian dairy farmers with a vital margin buffer to absorb financing pressures.

• Horticulture: The wide-ranging impact of the El Niño Southern Oscillation upon key fruit export competitors may provide a slight boost to demand for Australian produce into 2027.

• Sheep: The ratio of lamb to barley prices continues to encourage additional feeding across southeastern Australia, and is expected to support lamb markets through as supply picks up through the spring flush.

• Wool: Wool buyers have been focusing on quality fleeces while auction volumes tighten. A flow on effect from good seasonal conditions has seen some impact to fleece strength, adding downwards pressure to prices.

• Climate and carbon: The CSIRO has launched a 5-year STRAP project on the viability of regenerative ag viability. October rains offer crop relief, but warm/dry outlook creates heat stress risk over the coming weeks.