'Cautious optimism' for Agricultural trade conditions in second half 2025 amidst heightened global uncertainty for producers

Bendigo Bank’s 2025 Mid-Year Australian Agriculture Outlook report provides an in-depth perspective on supply, demand, and price outlooks for Australia’s major agricultural commodities for the second half of 2025. 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.  

The two major themes driving a varied outlook across the sector over the coming six months are challenging seasonal conditions and the volatile geopolitical environment that has changed significantly over the past six months. Overall, the outlook for Australian agriculture is cautiously optimistic with the potential for improved seasonal conditions, combined with rising consumer demand and lower interest rates.  

Heightened uncertainty within the global trade environment remains a headwind for producers, processors and exporters alike, however, more favourable trade terms and strong demand is expected to provide ongoing price support.  

Bendigo Bank Senior Manager Industry Affairs, Neil Burgess said “Growing uncertainty in the global trade environment, driven by tariff announcements from the US and China is leading to increased volatility in markets. The largest impacts of the trade conflict and the sweeping US tariffs on Australian agriculture at this stage are generally expected to be through downstream effects, rather than directly from the 10 per cent tariff imposed by the US on Australia.   

“The recent apparent de-escalation in trade tensions between the US and China is easing concerns slightly, but any sustained agreement appears to be a long way off, which may improve the chances of a trade deal being struck between Australia and the EU, with the added potential for significant opportunities, particularly for both Australian beef and lamb exports.  

Exports a bright spot 

 “Demand for beef is set to remain firm as the US reduction in supply continues to favour Australian producers. The cattle industry is set for a big second half of 2025 with current strong export demand likely to be sustained and prices also likely to remain strong - trending marginally higher in the back half of the year.     

“Early cropping forecasts have winter production down 9 per cent from last season to 54.5 million tonnes, but a late break across southern Australia has lifted confidence and added upside potential. Export demand has been very strong for canola, barley and chickpeas, with ending stocks predicted to be at multi-year lows.     

“Domestic demand for horticultural produce is expected to lift as prices at the checkout ease and record calendar year exports are also forecast, despite slightly softer export demand with almonds, citrus, avocados, macadamias, stone fruit, potatoes, carrots and onions particular bright spots.  

“Lamb export volumes are expected to be lower as supply comes under pressure, with demand from Australia’s key markets remaining strong, particularly from the US, while demand from China is also expected to remain elevated for both lamb and mutton,” Mr Burgess concluded.     

Fast facts

Cattle

A lift in beef production, strong export demand and an increase in prices gives a positive outlook for the cattle industry. 

Cropping

Adequate global supplies will pressure domestic prices near-term, while geopolitical tensions and trade policy shifts will create volatility and marketing opportunities.  

Dairy

With Australian industry confidence low, producers are seeking support to manage the contraction of the industry. 

Horticulture

Rising domestic demand, combined with improved yields and quality will provide a boost to growers despite easing prices. Record calendar year export value is forecast.

Sheep 

Prices should remain firm over the next six months, but production will ease following dry conditions and destocking over the past two years.

Wool  

A reduction in supply should provide enough support to keep prices around their current level.

States roundup  

Queensland 

•  Output across most major fruit varieties should continue to see above average yields including citrus, avocados and bananas. Quality prescriptive retail demand has become increasingly common as improved output allows supermarkets to pick and choose between produce. This is also seeing a higher number of seconds hit wholesale markets.  
• Vegetable supply from Queensland and northern New South Wales will lift through July. This follows a cold start to winter which slowed crop development and limited availability. 
• The key production region of Bundaberg is seeing decent macadamia yields with a large number of trees in the region now five years old. However, some producers further south have seen a significant impact from inclement weather events earlier in the year. Macadamia export prices through the first half of 2025 have remained well above the 2024 season. Prices are expected to remain higher year-on-year on the back of strong demand from China.
• Grain growers in Queensland are generally well positioned at the mid-point of 2025, with winter wheat production tipped to reach around 2.1 million tonnes. This is relatively in line with the five-year average, but down 9 per cent year-on-year. Ample stocks and a strong production outlook for the coming season is likely to see prices trade at a discount to the southern markets.   
• Queensland’s cattle industry is forecast to see a favourable second half of 2025. Rising export demand is expected to keep prices strong throughout the back half of the year. The recent rainfall has also boosted optimism around the state. The most recent three-month outlook from the Bureau of Meteorology has indicated an above average chance of median rainfall for the majority of the state. However, a key watch will be if seasonal conditions continue to be favourable. Producers may prefer to keep stock on farm rather than sell and capitalise on the pasture available. Beef production is expected to remain mostly stable as the high volumes of cattle at local markets and international demand for Australian beef encourages processors to continuously purchase stock.  
• Queensland’s dairy industry has been resilient to the challenges presented in 2024/25. New season outlooks are looking to lift relative to 2024/25 as wet conditions across the state have had impacts on animal health, pasture growth and feed quality. While this forced some producers from the industry, others used the opportunity to reinvest in infrastructure contributing to its projected production, however supply is hindered by lower Queensland herd numbers. 

 New South Wales

• Output across most major fruit varieties should continue to see above average yields including citrus, and avocados. Increasingly, quality prescriptive retail demand has become common as strong output allows supermarkets to pick and choose between produce. This is also seeing a higher number of seconds hit wholesale markets.  
• Producers across northern New South Wales have reported a significant impact on yields following the challenging and unpredictable weather seen over recent months that has driven a recent crop downgrade. Thankfully, quality is reportedly excellent, which remains key to engaging with export markets. Export prices through the first half of 2025 remained well above the 2024 season. Prices are expected to remain higher year-on-year on the back of strong demand from China.
• New South Wales winter crop production is forecast to be relatively strong in 2025/26, however, it will be down slightly on the incredibly strong production figures the previous season. Wheat production is forecast at 10.3 million tonnes, up 23 per cent compared to the long-term average but down 17 per cent year-on-year. Strong local supply and a positive production outlook is expected to weigh on prices in the second half of 2025. 
• The cattle industry forecast for New South Wales remains favourable throughout the back half of 2025. Strong export demand is expected to keep prices firm and keep the local competition already seen at saleyards elevated. Beef production has been higher year-to-date and is expected to see modest gains throughout the next six months leaving it moderately higher than 2024 overall. Like Queensland, a key factor moving forward will be the producers’ decision as to whether to retain stock as more pasture becomes available. The latest forecast is similar to Queensland, with an above average chance of median rainfall across cattle regions making it a key watchpoint as we move into the second half of 2025.  
• New South Wales’ milk production is exceeding market expectations as favourable seasonal conditions through 2024/25 look set to continue into the new season. While the rainfall forecast looks positive, dry conditions in the south and flooding in the north will weigh on the growth of the 2025/26 milk pool. Despite setbacks, New South Wales milk production is forecast to remain stable year-on-year. 

  Victoria

•  Picking of navel oranges is underway, yields are looking positive, with the industry anticipating a consistent lift in production over coming years with young plantings yet to hit peak production. Quality appears high following the dry first half of the year which has limited disease pressure. Sizing is also in the ideal marketing range for both domestic and export consumers. This should ensure there will availability of produce to meet both supermarket and export demand. 
• Vegetable prices are expected to ease over coming months as seasonal shortages begin to subside. Question marks surrounding potato production across the back half of 2025 remain. Producers located in more rainfall dependant regions including Ballarat will be hoping for decent rainfall totals to ensure decent yields come harvest in late 2025 and early 2026. 
• The 2025 almond harvest wrapped up in April. Post-harvest processor reports have indicated a further reduction to crop size of around 10-20 per cent. Quality has underwhelmed across the key production region of Sunraysia. Meanwhile demand from China, (the world’s largest consumer) is expected to remain firm in the back half of 2025 despite the reduced quality and question marks surrounding economic slowdown.  
• Victorian milk production has faced a challenging season, and production in coming months is expected to be lower year-on-year. Due to the drought conditions in western Victoria, increased feed and irrigation costs are presenting ongoing challenges to future production as producers are culling herds. New season farmgate prices sit around the $9.00/kg MS mark which are at the bare minimum producers expected and are unlikely to reverse ongoing industry contraction. 
• Victorian grain growers have faced a challenging start to the 2025 winter crop season, with dry conditions and a late break coming in early June. Despite the dry start, wheat production is tipped to increase in 2025 to 4.0 million tonnes, up 17 per cent year-on-year but still down on the five-year average. The recent rainfall has improved the outlook for this season, however significantly more rain is needed and the dry start will continue to pose issues relating to late germination. Prices will continue to be supported by the heightened production risk at the local level, while global prices are facing downward pressure from the strong global production outlook.    
• Victoria’s cattle prices are forecast to be marginally higher throughout the second half of this year. The ongoing high volumes of Australian beef purchased internationally is expected to translate into stronger prices locally. The latest Bureau of Meteorology forecast has shown cattle regions to have an average to above average chance of median rainfall over the next three months. Should this rainfall eventuate, it is still unlikely many regions will have enough pasture to feed higher numbers of cattle. Slaughter rates have been higher throughout the first half of 2025 than in 2024 and with restocker demand forecast to be soft due to unfavourable seasonal conditions, production will continue to be greater than 2024 highlighting the destocking phase the industry is currently in.  
• Victorian lamb prices are forecast to remain elevated over the next six months, well above five-year average levels. However, further upside will be limited by processor appetite and their ability to pass on increased costs to consumers. Production in Victoria is expected to be significantly lower following destocking, while dry conditions at joining and reduced feed availability at lambing is expected to impact weaning rates. Consumer demand is likely to be supported by easing cost-of-living pressures and tighter protein supply with reduced lamb output from New Zealand and beef output from the US. The prolonged period of destocking at the national level will continue to support mutton prices as well. 
• The wool market is hoping to find price support at the current levels despite a stronger Australian dollar, primarily due to reduced supply. The second half of 2025 is forecast to have lower supply of wool as many producers continue destocking or taking advantage of higher lamb prices. Demand has remained flat for the current season, however, there is some hope it may pick up as the economy in key market China improves. Prices and demand will be pressured downward by a strengthening Australian dollar. Ongoing high input costs continue to create a challenge for producers. With Victoria one of the areas particularly suffering from drought conditions early in the year, flock numbers have declined greater than some other states. Feed stocks have been greatly diminished, reducing supply even further for the season ahead. 

South Australia  

•  Picking of navel oranges is underway and yields are looking positive, with the industry anticipating a consistent lift in production with young plantings yet to hit peak production. Quality appears high following the dry first half of the year which has limited disease pressure. Sizing is also in the ideal marketing range for both domestic and export consumers. This should ensure there will availability of produce to meet both supermarket and export demand. 
• The 2025 almond harvest wrapped up in April. Post-harvest processor reports have indicated a further reduction to crop size of around 10-20 per cent. Quality has underwhelmed across the key production region of Sunraysia. Meanwhile demand from China, (the world’s largest consumer) is expected to remain firm in the back half of 2025 despite the reduced quality and question marks surrounding economic slowdown.  
• Dry conditions over the last six months have resulted in poor potato seed yields and availability. All southern states are currently harvesting seed, fresh, and processing potatoes with planting of fresh potatoes also underway. 
• The dry conditions continued in the South Australian grain growing regions in the first half of 2025, although rainfall in June has helped improve the outlook. Wheat production is forecast to lift 40 per cent to 4.2 million tonnes, however, this will still be down on both the five- and ten-year averages. The late germination of crops will continue to pose production risks as we move through the season, with increased risk of frost damage at flowering as well as heat stress at grain fill. Growers will need favourable conditions through the second half of the year as subsoil moisture is limited. Prices will continue to be supported by the heightened production risk at the local level, while global prices are facing downwards pressure from the strong global production outlook.   
• The current forecast and recent dry conditions are likely to hinder most of South Australia. With supply agreements expiring, some dairy producers are likely to not recontract for the 2025/26 season with high farmland prices likely to burden new entrants who could offset industry exits. Therefore, South Australian milk production is expected to continue its declining production trend.  
• South Australia’s cattle prices are expected to see a slight increase through the second half of 2025. This comes on the back of high demand for cattle from processing centres rather than producers looking to restock. Drought conditions continue to wreak havoc on many areas of the state which means restocker demand will be weaker through the back half of the year. Production has been moderately higher so far in 2025 and this is likely to remain mostly stable, leaving 2025 as a whole, up from 2024. The three-month outlook from the Bureau of Meteorology shows an above average chance of median rainfall and should this be realised, it would be a welcome relief to many growers, encouraging them to start restocking heading into 2026. 
• South Australian lamb prices are expected to remain firm through the second half of 2025, with support mainly coming from tight supply at the national level following two tough seasons and elevated turn-off. However, further upside in prices will be limited by processor appetite and their ability to pass on increased costs to consumers. Extremely dry conditions across South Australian growing regions over the past 18 months has resulted in destocking and has impacted production, resulting in the forecast smaller lamb numbers in the coming Spring. Consumer demand is likely to be supported by easing cost-of-living pressures and tighter protein supply with reduced lamb output from New Zealand and beef output from the US. The prolonged period of destocking at the national level will continue to support mutton prices as well. 
• The wool market is hoping to find price support at the current levels despite a stronger Australian dollar, primarily due to reduced supply. The second half of 2025 is forecast to have lower supply of wool as many producers continue destocking or taking advantage of higher lamb prices. Demand has remained flat for the current season, however, there is some hope it may pick up as the economy in key market China improves. Prices and demand will be pressured downward by a strengthening Australian dollar. Ongoing high input costs continue to create a challenge for producers. With South Australia one of the areas particularly suffering from drought conditions early in the year, flock numbers have declined greater than some other states. Feed stocks have been greatly diminished, reducing supply even further for the season ahead. 

 Western Australia 

• Fruit and vegetable pricing remains elevated albeit roughly in line with last season on the back of typical yields and reduced supply disruption compared to what occurred across the eastern states.  
• The outlook for Western Australian grain growing is mixed but cautiously improving following recent rainfall. The Geraldton zone has seen improved soil moisture levels recently after a dry start, while the Esperance zone is well positioned with good crop conditions. Western Australia’s wheat production is forecast to be lower year-on-year but relatively in line with the long-term average. Barley production is also tipped to be lower than last season, however, is expected to be above the 10-year average level. Wheat prices are expected to face pressure from the high carry out and potential upside in the production forecast.  
• Western Australia is still recovering from the culling of the 2023/24 season which affected the states milking herd. Western Australian production is forecast to contract in 2025/26 as margin pressures persist and people turn towards beef production. However, if favourable conditions persist this decline in production is likely to be mitigated. 
• Western Australia’s cattle industry is forecast to follow similar trends to the eastern states, with the high export demand keeping prices strong in the back half of the year. The rainfall early in 2025 has translated into producers keeping more stock on hand and production seeing a softer start to the year. This is expected to continue as producers utilise pasture availability rather than sell. Production is forecast to remain stable, whilst prices see a modest increase on the back of strength in export markets.
• The wool market is hoping to find price support at the current levels despite a stronger Australian dollar, primarily due to reduced supply. The second half of 2025 is forecast to have lower supply of wool as many producers continue destocking or taking advantage of higher lamb prices. Demand has remained flat for the current season, however, there is some hope it may pick up as the economy in key market China improves. Prices and demand will be pressured downward by a strengthening Australian dollar. Ongoing high input costs continue to create a challenge for producers. For Western Australia, the phase out of live sheep exports is pushing producers to decide between restocking or changing their enterprise mix going forward. 
• Lamb prices are expected to remain relatively firm in Western Australia through the second half of the year, benefitting from tighter lamb and mutton supply following a prolonged period of high turn-off. Further upside in prices will be limited by processor appetite and their ability to pass on increased costs to consumers. Mixed conditions over the past 12 months have impacted production, while industry sentiment has also been impacted by the phase out of live sheep exports, which is leading some growers to move away from the industry. Consumer demand is likely to be supported by easing cost-of-living pressures and tighter protein supply with reduced lamb output from New Zealand and beef output from the US. The prolonged period of destocking at the national level will continue to support mutton prices as well. 

 Tasmania

• Rainfall is likely to be below average across northern Tasmania over the coming months, where a large proportion of the state’s horticultural production remains. Most water storages remain well below 50 per cent full which is expected to drive irrigation costs higher for producers over the back half of 2025 which will pressure margins.  
• Yields across key horticultural crops including potatoes may come under some pressure for farmers that rely more-so on rainfall, however, the quality of crops remains favourable due to diminished disease pressure which will continue to position producers to benefit from quality-focused export demand.  
• Lower Tasmanian land values are attracting new entrants and encouraging existing business to act on growth intentions. Despite this, milk production in 2024/25 was below average due to seasonal conditions, corporate farm absences and high input costs impeding margins. The outlook for 2025/26 remains positive with milk production forecast to grow.  
• Tasmania’s cattle industry is set to experience a steady continuation to the end of 2025. Prices are forecast to marginally ease throughout the second half of 2025, as the dry weather forecast may encourage producers to sell stock rather than restock. However, the firm export demand will continue to provide support for prices. Slaughter remains above average and is likely to increase modestly due to the increase in cattle available on local markets for processing centres to purchase.   
• Tasmanian lamb prices are forecast to remain elevated over the next six months, supported by tighter supply at the national level following two tough seasons and destocking. However, further upside in prices will be limited by processor appetite and their ability to pass on increased costs to consumers. Production in Tasmania is expected to decline due to unfavourable seasonal conditions at joining and reduced feed availability at lambing, with both expected to reduce weaning rates.  Consumer demand is likely to be supported by easing cost-of-living pressures and tighter protein supply with reduced lamb output from New Zealand and beef output from the US. The prolonged period of destocking at the national level will continue to support mutton prices as well. 
• The wool market is hoping to find price support at the current levels despite a stronger Australian dollar, primarily due to reduced supply. The second half of 2025 is forecast to have lower supply of wool as many producers continue destocking or taking advantage of higher lamb prices. Demand has remained flat for the current season, however, there is some hope it may pick up as the economy in key market China improves. Prices and demand will be pressured downward by a strengthening Australian dollar. Ongoing high input costs continue to create a challenge for producers. In Tasmania, supply should hold somewhat steady although a move away from Merino production will change the clip profile.   

To view the full Bendigo Bank Agribusiness Australian 2025 Mid-Year Outlook report, visit:  Agriculture insights | Bendigo Bank