Update
Australia agribusiness monthly August 2026: War impacts fuel and grain prices
Here are the main highlights for some of Australia’s key commodities and economic influences this month. The full report covers the developments to watch in the upcoming weeks.
Climate: July conditions were mixed and largely unfavourable, with light rainfall and renewed dryness in key cropping regions. The spring outlook points to below-median rainfall risk and above-average temperatures accelerating crop and pasture maturity.
Wheat and barley: Wheat and barley prices have found short-term support from export disruption risk, higher energy prices, and tighter corn supply expectations. However, Australia’s improving wheat yield outlook is pressuring local basis, limiting upside for growers despite firmer global benchmarks.
Canola: Canola prices firmed in July as European heat threatened sunflower and soybean output, while energy risk related to freight risks in the Straight of Hormuz and the Red Sea supported the broader vegetable oil market. On the flipside, this year’s record global canola supply limits price upside.
Beef: Australian cattle prices eased through late July as the market contended with a range of uncertainties. Restricted export markets, increased global competition, and local seasonal factors will play on the market over the coming months, removing some of the price strength we saw in 1H 2026.
Sheepmeat: Lamb and sheep slaughter volumes lifted at the end of July, hinting at the beginning of new-season lamb supplies. Price direction remains uncertain: Strong lamb numbers could soften prices further, while limited supply could limit any downside movements.
Wool: Wool prices eased through July despite the market heading toward the winter recess and no auction sales for three weeks. Limited supplies continue to support the market, but eyes will be on the Wool Production Forecasting Committee’s August report to see if there are adjustments in expected volumes.
Cotton: Cotton prices have strengthened as local weather concerns, improving mill demand, and reduced grower selling tighten the market balance for 2026/27. China’s buying activity and reserve releases are strong, while global stocks are anticipated to fall by 6% in 2026/27.
Farm inputs: Fertiliser markets strengthened in July, supported by logistics disruptions, tight supply, and rising raw material costs, and agrochemical inflation continued to add to farm input cost increases.
Sugar: Sugar prices remain range-bound, but weather risks in India, the EU, and Thailand, alongside uncertainty around Brazil’s sugar mix, could support prices. Potential export policy shifts in India could tighten global sugar supply and lift prices.
Dairy: Dairy commodity markets remained under pressure in July. Well-supplied global markets outweighed early signs of slowing milk production growth across major export regions. We expect global markets to become more balanced in the coming months as milk supply growth across key exporting regions continues to stall, providing support for commodity prices.
Consumer foods: Food inflation remained elevated in June, driven by higher prices in foodservice and for key grocery staples, including red meat, milk, and fruit. High supply chain costs, weather-related production risks, and the potential impact of El Niño are expected to keep pressure on food prices.
Interest rate and FX: Market expectations for further RBA rate hikes fell in July following the release of weaker-than-expected inflation figures. We continue to expect one more hike in November and project the Australian dollar to trade around the 0.70 mark over the next three months before rallying to 0.73.
Oil and freight: The breakdown of the memorandum of understanding between the US and Iran sent oil prices sharply higher in July. The decision by the Houthis in Yemen to join the conflict raises risks of even tighter oil supply.