Bendigo Bank’s Australian Agriculture Mid-Year Outlook 2026

Two major themes are driving significant uncertainty across the sector however, the volatile geopolitical environment, which has pushed input costs higher, and a forecast for challenging drier weather conditions over the coming six months. The conflict in the Middle East has notably impacted fuel and fertiliser costs, while rising interest rates and a stronger Australian Dollar are adding further pressure on producer margins.

Eliza Redfern, Senior Manager of Industry Insights at Bendigo Bank Agribusiness said producers are certainly navigating a complex and challenging environment looking into the next six months.

“While the widespread rainfall to start winter has been a welcome relief and has boosted confidence, there is no doubt the stakes are higher this year. The conflict in the Middle East has created an unfavourable cost environment, squeezing margins across all commodities,” Ms Redfern said.

“Furthermore, a forecast for a strong El Niño event bringing warmer and drier conditions, means the dial could swing quickly from cautiously optimistic to a more negative footing, especially if a widespread outbreak of the H5N1 avian influenza strain occurs. Farmer’s production and profitability will be tested as they manage these significant cost pressures and seasonal risks through the remainder of the year.

“The conflict-driven closure of the Strait of Hormuz has sent a shockwave through supply chains, driving diesel and fertiliser prices sharply higher and impacting everything from vegetable planting acreage to broadacre crop rotations. While the recent peace agreement does offer hope, it will likely take months for supply chains to normalise.

“Despite these headwinds, the relatively favourable start to the second half of this year and expectations of firm commodity pricing provide positive footing. The tight supply of sheepmeat and cattle is expected to keep prices largely rangebound.

“Success in the coming months will hinge on strategic management of input costs and navigating the critical spring seasonal window amidst geopolitical and weather uncertainty,” Ms Redfern concluded.

Fast Facts

Cattle

Tight domestic supply is being outweighed by growing export headwinds, foreshadowing a modest easing of prices from recent near-record highs.

Cropping

An improved season has lifted crop potential, but comfortable global supply and weak Australian export competitiveness are keeping prices rangebound.

Dairy

Farmers will continue to feel the margin squeeze, weighing on production, while the price competitiveness of Australian dairy products will be challenged.

Horticulture

Robust fruit and nut yields are tempered by mixed demand and cost pressures, placing a premium on top-quality produce. Tight margins remain a key concern.

Sheep

Ongoing strong lamb and mutton pricing will continue to benefit producers, although production is likely to remain subdued in the second half of 2026.

Wool

The industry will need to navigate price volatility as supply shortages compete against global macroeconomic demand pressures.

States Roundup

Queensland

The agricultural outlook is broadly positive but tempered by a concerning dry forecast and high input costs. Cattle prices are expected to ease modestly. Winter crop prospects have improved with recent rain, while in horticulture, a record macadamia crop is facing challenges with a high proportion of smaller, discounted nuts.

New South Wales

A cautious optimism defines the outlook, balancing recent recovery against a dry forecast. Northern cropping regions have benefited from late rain, while the dairy sector continues to grow. Livestock producers have regained confidence, with strong prices for cattle, sheep, and wool, but a dry spring remains a critical watchpoint.

Victoria

A strong autumn break has set a positive tone, though a developing El Niño poses a threat. The state is positioned for an above-average crop, but the dry forecast and high costs are a key test. Dairy margins are tightening, and while livestock conditions are favourable, producers are cautious about restocking.

South Australia

A dramatic seasonal turnaround has significantly boosted the outlook, with early rain underpinning expectations of at least an average crop. However, a forecast warm, dry spring presents heat and frost risks. Livestock producers are in a gradual recovery, with lamb and mutton prices near record highs, but cautious flock management is prevalent.

Western Australia

A promising cropping outlook has been established following widespread June rainfall. Barley markets are firm due to strong export demand, while wheat faces carryout risks. The cattle industry is poised for robust export activity, and sheep prices remain elevated, though the phase-out of live sheep exports is accelerating a structural shift in the industry.

Tasmania

The outlook is a mix of favourable market conditions and emerging weather risks. While recent rain improved soil moisture, a dry forecast is expected to constrain dairy production. Cattle markets remain stable, and lamb prices near-record highs, but processors are squeezing margins. In horticulture, international demand for stone fruit is expected to be a bright spot.

To view the full Bendigo Bank Agribusiness Australian 2026 Mid-Year Outlook report, including more in-depth detail on each State and Industry, visit: Agriculture insights | Bendigo Bank