Australia agribusiness March 2026: Resilience tested – Middle East tensions and Australian agribusiness

Wheat and barley: Global wheat prices strengthened over the past month on geopolitical spillovers, weather-related supply concerns and short covering. Australian markets were supported by strong exports. The outlook now hinges on Northern Hemisphere weather as crops emerge from dormancy.

Canola: Oilseed prices have firmed on stronger energy markets, export demand and robust global vegetable oil consumption, despite rising oilseeds supply expected in 2025/26. For the 2026/27 season, prices are supported by steady demand, and weather developments are the swing factor.

Beef: Cattle prices are expected to continue tracking sideways. Finished cattle prices remain at historic highs, driven by strong global demand, while restocker cattle prices are around the five-year average, reflecting the steady state of the national cattle herd.

Sheepmeat: Lamb and mutton prices are expected to remain around current high levels. The prospect that there remain some lambs in the system will support prices, but as we move toward the middle of the year these numbers will decline, although we don't believe prices will rise as a result.

Wool: Wool prices held steady over the past month, with the EMI indicator up 2%. Finer microns largely performed better than coarser wool. However, the standout was 25-micron wool which rose 16% MOM.

Cotton: Signs that global cotton production could tighten next season are providing the market with some hope at a time when Australian cash prices and US futures are downtrodden. Should supply tighten and demand hold up next season, speculators may begin to question their large net-short position.

Farm inputs: For fertilisers, all focus is on the US and Israel-Iran war. The wider Middle-East region represents approximately 45% of global urea exports and is heavily reliant on the Strait of Hormuz. Should disruptions continue, urea prices could rise sharply.

Dairy: There has been a broad-based bounce in dairy commodity values, which is welcome news for local dairy exporters. The global market remains set to be well supplied in the short term, which could limit further upside. Much will depend on how much milk powder the Middle East continues to import.

Consumer foods: Food and non-alcoholic beverage inflation was slightly down to 3.1% in January 2026 on an annualised basis. The main contributors in grocery channels were coffee, meat and dairy products. Out-of-home meal price inflation is also elevated amid rising food costs and wage inflation.

Interest rates and FX: As we warned last month, the cash rate has risen, and more rate hikes could be on the way. The Australian dollar remains close to multiyear highs, with potential to climb to 0.72 against the USD by year end.

Oil and freight: Geopolitical risks in the Middle East have now been realised as war has broken out between the US, Israel and Iran. Oil prices are rising, and higher freight insurance fees are also likely to spike supply chain costs.