Bendigo Bank Agribusiness: Outlook broadly positive for Australia’s farmers heading into 2026

Bendigo Bank’s 2026 Australian Agriculture Outlook report provides an in-depth perspective on supply, demand, and price outlooks for Australia’s major agricultural commodities for the first half of 2026.

The six months ahead for Australian agriculture will be impacted by seasonal conditions and the economic environment, two key factors which have the capacity to significantly benefit or hamper the industry moving through the first half of 2026.

With around two thirds of Australian agricultural products exported, increasingly volatile global markets will be key to growth prospects across Australia’s agribusiness sector, underscoring the importance of maintaining strong diversified trade relationships.

Bendigo Bank Agribusiness Senior Manager Industry Insights, Eliza Redfern said: “Seasonal risk and economic uncertainty remain at the forefront, but the outlook for Australian agriculture is broadly positive as we move into 2026. While higher on-farm costs will weigh on the production of vegetables and milk, the tight supply outlook for sheep and wool, in addition to strong export demand for beef and demand lifting for some crops, will help support pricing into the new year.

“Beef production is tipped to drop slightly from the high volumes seen in 2025, and strong demand especially from an export perspective is likely to keep prices firm, supported by reduced supply in the US. This factor will help keep Australia as a preferred choice in key export markets across Asia, despite the US recently removing the additional tariff imposed on Brazilian beef.

“Australia’s total winter crop production for 2025/26 is now forecast at 62.3 million tonnes, representing a 12 per cent increase from our mid-year estimate of 54.5 million tonnes. This would be the third largest crop on record, driven by an extraordinary turnaround in Western Australia, where the production forecast has jumped 26 per cent, or around 5.0 million tonnes, since June.

“Weather remains the key driver of horticultural output heading into the first half of 2026. Based on current forecasts, we should see both high quality and volumes across key production regions, with output to remain strong across the fruit and nut sectors. A major dampener continues to be input costs that continue to pressure margins with fertiliser, irrigation, chemical and labour costs showing no signs of sustained easing in coming months.

“We’re also expecting Australian lamb and mutton supply will remain lower in the first half of 2026, with prices easing from recent record highs but remaining well above the five-year average. The recent run of strong prices is expected to continue into 2026 due to firm demand and the tight supply environment, driven primarily from processors who have increased their capacity over the past two years,” Ms Redfern concluded.

Fast facts

Cattle: Strong beef production and export demand along with stable prices indicate a favourable outlook for the cattle industry. Australia’s beef industry is set for a big 2026 with strong exports and well above average slaughter rates.

Cropping: Harvest pressure keeps wheat prices soft early, but Q2 strength should emerge as Southeast Asian feed demand lifts. Barley values are likely to find support from China and the Middle East in early 2026. Barley and canola dominate Q1 exports, allowing wheat to roll into Q2. High-protein and noodle wheat are attracting early buyer interest. Demand for feed grain is at a historical peak, driven by sustained, high-volume output across all key intensive farming sectors.

Dairy: Expectations for milk production have improved whilst the outlook for farmgate milk prices has eased. Downside risks cloud the outlook for both. Milk production is set to drop one to two per cent to around 8.2 billion litres, while continued global milk supply growth is expected across other major dairy export competitors. High input costs continue to plague farmers and production, with indicators for fodder and fertiliser around one third higher year-on-year, in many cases double that of five years ago, despite recent easing. Our expectation for the average southern farmgate milk price has eased, to $9.40kg MS (and $9.78kg MS nationally) for the 2025/26 season.

Horticulture: A shift in market dynamics with uncertain export demand, strong supply forecasts and high costs environment is driving a slightly less favourable outlook compared to 2025. Output to remain high across fruit and nut sectors while vegetable production will be pressured by high irrigation costs. Input costs continue to drive significant margin pressure with fertiliser, irrigation, chemical and labour costs showing no signs of any sustained easing in the coming months. Fruit and nut prices are expected to ease slightly with elevated supply and slightly softer export demand. Looking to the supply outlook for 2026, vegetable production is anticipated to sit below the first half of 2025 as reduced water storages and significantly higher irrigation costs limit production potential.

Sheep: The recent run of strong prices is expected to continue into 2026 due to firm demand and the tight supply environment, with lamb and mutton supply likely to remain lower in the first half of 2026. Australian lamb prices expected to ease from the recent record highs but will remain well above the five-year average. Demand to remain elevated as processors look to maintain throughput, while restocking activity will also be price supportive.

Wool: The Australian wool industry is looking to build on its positive start to the season with constrained supplies supporting rising prices. Improving demand from China is aiding the Australian wool market, although European demand lags behind. The reduced supply from across the country has been the headline feature of the Australian wool market, driving a welcome price spike across all microns. There are also indications that flock numbers should start to build up again in the year ahead. Growers can hope the recent lift in demand will continue and help lift prices further.

States roundup

Queensland:

• The forecast for the state’s cattle industry is expected to remain positive leading into 2026. Export demand is likely to remain at high levels which will support local prices at saleyards. Processors are likely to be very active at local markets creating strong competition for stock to match the appetite from international markets. However, if seasonal conditions turn dry against the latest Bureau of Meteorology forecast, prices could come under pressure as supply lifts at saleyards.
• Grain growers in Queensland are the first to wrap up harvest for the 2025/26 winter crop season. Growers had a mostly smooth run at harvest except for showers in the back end of November causing some delays. On the positive side, additional moisture encouraged some extra sorghum to be planted. Final winter crop production is estimated at 3.8Mmt, down five per cent from last season. Despite above average production, the final outcome is a bit disappointing after a dry September and October trimmed potential from what was looking like a record crop for much of the season.
• Reduced global macadamia output is supporting kernel prices as China cautiously resumes in-shell buying. However, a shift in the global demand environment presents a mixed outlook for prices heading into 2026. The continued expansion of macadamia production within China, our largest export market, is expected to place renewed pressure on in shell prices during 2026, with Australian production continuing to lift as plantations mature.
• Avocado producers are in for another large season; producers located in North Queensland expect stable yields in 2026, though production remains dependant on weather conditions over the coming month which will affect flowering and fruit set. Meanwhile, yields of the Shepard variety that will come to market from February are expected to be 10 per cent higher than last season.
• Milk production in Queensland lifted in the first quarter of 2025/26, reversing slight losses from the previous season’s wet conditions. The rate of increase has slowed over this time and a relatively stable full season total is expected by June.

New South Wales:

• At the beginning of December, the New South Wales harvest was over 60 per cent complete, with growers in northern regions largely finished, while those in the state’s south were just ramping up. To date yields and quality have been good. Wheat markets have remained resilient to harvest pressure with growers selling only what they need to. Canola remained the most active commodity through harvest supported by both strong domestic and export demand.
• New South Wales cattle producers can expect a stable beginning to 2026. Many will be eyeing the forecast and utilising on farm feed before looking to sell; if seasonal conditions prove unfavourable, producers may look to increase turn-off which would weigh on prices. However, strong export demand will limit any significant downside to prices.
• Lamb prices in New South Wales are expected to ease from the recent record highs in the first half of 2026. However, values are still likely to remain historically strong, gaining support from the reduced quantity of lambs, higher processing capacity, firm export demand and restocking activity across the southeast. Production is expected to remain strong on the back of relatively favourable seasonal conditions, especially in the northern parts of the state.
• The wool market is looking to continue its positive start to the season, with further price growth driven primarily by reduced supply. Some producers will start to look at increasing flock sizes in 2026, however, there will be a lag before wool supply starts increasing again. Improved demand from China has also helped to lift prices, however, a continued upwards trajectory remains uncertain due to political tensions. Reduced supply and improved demand should provide upwards pressure on prices, although high input costs continue to create a challenge for producers.
• New South Wales has so far backed up a strong performance in 2024/25 with continued milk production growth into the new season. With decent seasonal conditions and heavy exposure to the domestic market, farmers are relatively well placed to contend with the ongoing challenges posed by high input costs. Our expectation is that year-on-year growth will continue to moderate as the season unfolds, and milk production will finish 2025/26 with a similar volume to the prior season.
• Output and quality across most major fruit varieties should remain strong across the first half of 2026, with plantations of oranges and avocados continuing to mature and produce larger crops. Vegetable production will be pressured by high irrigation costs with the entire horticultural sector still encountering tight margins off the back of elevated input prices.

Victoria:

• At time of writing, the Victorian harvest was off to a slow start, running more than 50 per cent behind the five-year average. This delay has had an immediate firming effect on nearby cash prices for feed grains. However, the outlook is constrained once harvest accelerates. Victoria is forecast to deliver a significant crop of 8.5 million tonnes, slightly exceeding the ten-year average. Once this volume comes to market, prices will be facing downward harvest pressure. This heavy flow, coupled with a globally well-supplied market, and weak international futures, is expected to reverse recent short-term gains, with many growers opting to store grain and await better post-harvest values.
• Victoria’s cattle industry is set for an interesting beginning to 2026, as the latest Bureau of Meteorology forecast shows a roughly even chance of achieving median rainfall. Export demand and processor buying will likely keep prices competitive at local markets, particularly if producers hold stock amidst supportive weather conditions. However, if seasonal conditions become unfavourable, local saleyards may see an influx of stock which would weigh prices down.
  • Victorian lamb prices are forecast to come back from the recent highs as supply continues to pick up, however, prices should remain historically strong. Supply will continue to build, but the quantity of lambs available is still expected to be lower following a prolonged period of destocking. Firm processor and export demand, as well as restocking activity should conditions allow, will also be supportive for prices. Dry conditions over the past two seasons have resulted in destocking across the state, so sheep prices should remain elevated, should favourable conditions prevail.
• The wool market is looking to continue its positive start to the season, with further price growth driven primarily by reduced supply. Some producers will start to look at increasing flock sizes in 2026, however, there will be a lag before wool supply starts increasing again. Improved demand from China has also helped to lift prices, however, a continued upwards trajectory remains uncertain due to political tensions. Reduced supply and improved demand should provide upwards pressure on prices, although high input costs continue to create a challenge for producers.
• Timely spring rainfall has eased some of the immediate pressure on Victorian dairy farmers, with improved pasture availability reducing the immediate need for scarce and expensive purchased fodder. Milk production continues to trail last season; the gap closed in the three months to September before opening up against a strong October in 2024. Continued favourable rainfall and a strong hay season will be required to support farmers and keep further year-on-year production losses to a minimum, with cost pressures, export market headwinds and smaller herds to contend with.
• Table grape crops are looking promising with early industry forecasts placing national production in line with last season at around 230,000 mt. This forecast has been supported by reports of strong flowering across Sunraysia and the Riverland. For context, this forecast production total sits 14 per cent above the ten-year average. Growers are monitoring for powdery mildew following a cold and wet November, but overall vineyard health appears strong.
• The final figures for the 2025 almond harvest have been announced by the Almond Board of Australia at 155,697 mt (kernel weight equivalent). This is a strong result for the industry considering the challenges some growers faced across the season. The supply outlook appears favourable as almond crops across Sunraysia and the Riverland are tracking strongly with yields looking similar to last year. Growers are optimistic that high grade packouts will be maintained while strong pricing has also been indicated by processors, although uncertainty surrounding the US tariff situation could see this pricing outlook shift rapidly.

South Australia:

• South Australia is experiencing a near record slow harvest start, creating a temporary lift in cash prices for nearby feed grain delivery. Domestic buyers are actively chasing limited immediate supply, mirroring dynamics in Victoria. However, the outlook is constrained once harvest accelerates, as the state is expected to deliver a significant crop of 8.37 million tonnes, slightly above the 10-year average. This large volume will impose downward pressure. South Australia remains a key source of near-term export coverage; this early demand should help limit downward price movements, providing a floor above the weakest international values. Quality downgrades remain a key market risk.
• Output and quality across most key fruit varieties is anticipated to sit above average in the first half of 2026. Positive seasonal conditions throughout spring and into the new year, alongside the ongoing maturation of recent plantings underpin this optimistic supply outlook. Table grape crops are looking promising with early industry forecasts placing national production in line with last season at around 230,000 mt. This forecast has been supported by reports of strong flowering across Sunraysia and the Riverland. For context, this forecast production total sits 14 per cent above the ten-year average.
• The almond supply outlook appears favourable as almond crops across Sunraysia and the Riverland are tracking strongly with yields looking similar to last year. Growers are optimistic that high grade packouts will be maintained while strong pricing has also been indicated by processors, although uncertainty surrounding the US tariff situation could see this pricing outlook shift rapidly.
• Impacts of the prolonged dry period are continuing to show up in South Australian milk production, with output for the four months to October the lowest in over a decade. The current season will continue to be one of supply contraction, as farmers focus on rebuilding fodder stocks and consolidating their businesses.
• South Australia’s cattle industry is forecast to see a mixed first half of 2026. Seasonal conditions do not appear to show a strong chance of above or below median rainfall, which could push producers to sell more stock. South Australia has suffered through a prolonged drought period and with limited feed available, rainfall would be welcomed post-harvest. Prices will remain supported by export demand like other states, but the key watch will be how seasonal conditions develop which will shape the direction of prices in the next six months.
• Lamb prices in South Australia are forecast to come back from the recent highs as supply continues to lift, however, prices should remain historically strong. Supply will continue to build into the new year, but the quantity of lambs available is still expected to be lower following the prolonged period of destocking, while firm processor and export demand, as well as restocking activity should conditions allow, will also be supportive. Dry conditions over the past two seasons have resulted in significant destocking across the state, so sheep prices should remain elevated should we see favourable conditions.
• The wool market is looking to continue its positive start to the season, with further price growth driven primarily by reduced supply. Some producers will start to look at increasing flock sizes in 2026, however, there will be a lag before wool supply starts increasing again. Improved demand from China has also helped to lift prices, however, a continued upwards trajectory remains uncertain due to political tensions. Reduced supply and improved demand should provide upwards pressure on prices, although high input costs continue to create a challenge for producers. South Australian growers have struggled through tough seasonal conditions over the past two years, although restocking should begin if conditions are favourable in 2026.

Western Australia:

• The adage that “big crops keep getting bigger” is proving accurate once again in Western Australia this season. At approximately 40 per cent complete, the harvest is delivering consistent upside surprises in both yields and receival volumes. As a result, state production forecasts are being progressively revised upward, with record grain production in excess of 26 million tonnes now considered a strong possibility.
• Avocado producers are in for another large season from a yield perspective, with Western Australian growers in the middle of harvesting another record crop of almost 60,000 mt. This is well above the 37,000 mt of avocados produced in the west during the 2024/25 financial year. Domestic consumption per capita is expected to lift above 5kg per person for the first time in 2026, however, this growth continues to be outpaced by increased local production. To maintain market balance and sustainable pricing for growers, the industry is continuing to target expanded export market access.
• Despite weather conditions being mostly favourable in Western Australia’s dairying regions this season, the state’s milk production continues to track below last year, after culling and farm exits (as several businesses convert to beef) during the 2024/25 season.
• Western Australia's cattle industry is expected to mirror the trends in the eastern states, but with greater price volatility. The Bureau of Meteorology is predicting drier conditions which may force producers to sell more stock, increasing market supply, however, the ongoing strong export demand will provide upwards pressure. This clash between potentially increased supply and strong export demand could lead to more variability in pricing in the first half of 2026.
• The wool market is looking to continue its positive start to the season, with further price growth driven primarily by reduced supply. Some producers will start to look at increasing flock sizes in 2026, however, there will be a lag before wool supply starts increasing again. Improved demand from China has also helped to lift prices, however, a continued upwards trajectory remains uncertain due to political tensions. Reduced supply and improved demand should provide upwards pressure on prices, although high input costs continue to create a challenge for producers. In Western Australia there has been a trend of producers prioritising meat production, although generally positive recent seasonal conditions will provide a boost to some producers.
• Western Australian lamb prices are expected to soften from the recent record highs, although should remain historically strong. Firm demand from processors and exporters, alongside generally tighter supply will be supportive, but the drier seasonal outlook may limit restocker demand. The phase out of live sheep exports continues to pose a challenge to the industry, however, sentiment has improved recently on the back of firmer prices (as reported by MLA).

Tasmania:

• Rainfall is likely to be average across Tasmania over the coming months. Most water storages in the state have lifted compared to this time last year, which should keep irrigation costs in check and support strong vegetable production. Concern surrounding mop top virus remains with the potato industry now firmly focussed on management.
• Tasmanian milk production is leading the country, with a strong bounce back from last season’s weather challenges. Growth is likely to moderate as the season progresses, but a benign rainfall outlook offers the prospect of maintaining good cow condition and reduced supplementary feed requirements compared with last year.
• Tasmania’s cattle prices are forecast to remain mostly stable. The dry weather outlook may encourage more selling of stock if these conditions eventuate. This would in turn apply some downwards pressure on prices as more stock become available at saleyards, however, the high demand for Australian beef on international markets will limit any strong declines in prices.
• The state’s lamb prices are forecast to ease from the record highs seen in 2025, although should remain historically strong. Processor and export demand is expected to remain elevated, and should conditions allow rebuilding to commence across the southeast of the country, restocking activity will also be supportive. Supply is expected to pick up from the recent lows as we move into 2026, although lamb numbers are forecast to be lower than the highs seen in the first half of 2025.
• The wool market is looking to continue its positive start to the season, with further price growth driven primarily by reduced supply. Some producers will start to look at increasing flock sizes in 2026, however, there will be a lag before wool supply starts increasing again. Improved demand from China has also helped to lift prices, however, a continued upwards trajectory remains uncertain due to political tensions. Reduced supply and improved demand should provide upwards pressure on prices, although high input costs continue to create a challenge for producers. In Tasmania, supply looks to decrease slightly as producers shift away from Merinos towards meat producing breeds.

To view the full Bendigo Bank Agribusiness Australian Outlook 2026 report, visit: Agriculture insights | Bendigo Bank