Australia agribusiness May 2026: Conflict abroad, consequences at home

Here are the main highlights for some of Australia's key commodities and economic influences for this month. The full report provides an overview of the developments to watch in the upcoming weeks.

Wheat and barley: Global grain markets are entering a critical phase for 2026/27 as weather risks intensify during Northern Hemisphere grain filling. Drought stress in the US Plains and dryness in Europe are tightening supply expectations, supporting firmer global wheat and barley prices.

Canola: Oilseed markets strengthened over the past month, supported by higher energy prices, expanding biofuel mandates and firm demand. Policy changes in Europe, especially Germany, are set to lift canola use in biodiesel, tightening supplies and supporting prices despite ongoing volatility.

Beef: Australian cattle prices dipped through April as drier conditions in northern NSW saw a large increase in cattle sales through saleyards. Global markets however remain strong and with other areas of the country able to absorb the northern NSW numbers. RaboResearch expects cattle prices to stabilise and possibly lift.

Sheepmeat: Lamb and mutton prices although dipping slightly at the end of April continue to remain at historically high levels. With the ongoing limitations on lamb and mutton supply we believe this high prices will remain as we head towards the seasonally lower slaughter months.

Wool: Wool prices performed well in April, with the Eastern Market Indicator up 8.7% month-on-month. On a year-on-year basis, the EMI is now up an impressive 53.8%, highlighting how quickly market dynamics have shifted amid tightening wool supply.

Cotton: ICE #2 cotton futures have rallied by around 20% since February, helping lift Australian cash prices above the AUD 600 per bale mark. Fund positioning appears to have turned more bullish, reflecting growing expectations of a slowdown in global cotton production.

Farm inputs: Fertiliser markets remain firm, with global urea prices continuing to rise as the effective closure of the Strait of Hormuz constrains global supply. RaboResearch has also noted a sharp month‑on‑month increase of around 20% in phosphate prices, driven by extremely tight sulphur availability.

Sugar: Sugar prices have proven volatile in recent weeks but overall are not benefiting much from high global crude oil prices. Potential weather and production risks could improve the outlook later in the year as El Niño might impact cops in key Asian producing regions.

Dairy: The rally in commodity values to start 2026 has started to lose some steam. Further upside in the near-term is limited with cheese markets, well supplied. Nonetheless, the recovery has provided a better footing for new season milk pricing.

Consumer foods: Australian consumer confidence remains very fragile. Food inflation is running at 3% year-on-year in March but further upside to food prices in the coming months will emerge as higher costs in the food system are passed through.

Interest rates and FX: The RBA is expected to lift the cash rate to 4.35% in May and RaboResearch is anticipating one more rate hike later this year as the Iran war continues to create inflation headaches.

Oil and freight: Oil prices remained volatile in April but there was some good news as the UAE announced it will be leaving OPEC and China indicated that it may soon lift export bans of diesel and jet fuel. The move from the UAE will likely increase oil supply, but not until Hormuz reopens.