Update
Australia agribusiness monthly June 2026: Dual risk dynamics, input inflation and weather variability
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.
Wheat and barley: The USDA’s initial 2026/27 outlook signalled a tighter global grain balance, with lower cereal production and historically low corn stocks, supporting prices. Despite a late-May market pullback driven by macro factors and seasonal pressure, underlying fundamentals remain supportive, pointing to firmer prices ahead.
Canola: Global canola production is rising, but stronger crushing and biofuel demand are absorbing supplies and reducing exports. Prices remain supported as energy markets and policy continue to favour vegetable oils.
Beef: Cattle prices recover the losses over the last couple of months as rainfall across larges parts of the country improves producer sentiment and numbers of cattle through saleyards decline. High cattle inventory continues to support record production and export volumes.
Sheep: Lamb and mutton prices recovered after price drops in late April, early May. Prices continue to remain strong in light of low and declining stock numbers. New production data shows lamb carcass weights reached new records as strong prices encourage producers to grow lambs out longer.
Wool: Wool prices continue to rise in the face of declining supplies. The EMI rose 2% for the month with Coarser microns seeing a larger rise. Ongoing limited supplies are expected to keep prices strong, with the potential for increased buying activity towards the end of the season to push prices higher.
Cotton: US cotton futures have eased back to the mid‑70s on improved weather across the US. With US weather conditions stabilising and Brazil exports strong, the market is shifting focus to Eastern Hemisphere supply risks due to a below-average monsoon forecast, supporting a broadly tighter global outlook.
Farm inputs: Input prices remain high and volatile, driven by energy markets, supply constraints, and policy restrictions. Rising costs are eroding farm margins and forcing demand rationing despite only temporary price relief.
Sugar: Sugar prices have declined recently due to oil market volatility and weaker ethanol economics in Brazil, with policy uncertainty shaping production decisions. While higher sugar output may pressure prices, weather risks in Asia rising biofuel demand could offer some support.
Dairy: Record whey prices continue to dominate global dairy markets settings. Meanwhile, new season milk pricing in Australia and New Zealand has been announced and is mostly steady with 2025/26 prices, as a recovery in commodity values supports early price signals.
Consumer foods: Food inflation falls to its lowest level since December 2021, but consumers are not out of the woods. Meanwhile, consumer confidence remains in the doldrums.
Interest rate and FX: As forecast, the RBA raised the cash rate by 0.25ppts in May to 4.35% – equal to the previous cycle high. There were some further signs of economic slowdown in the month, and the RBA sent some signals that it may be nearing the end of the hiking cycle, but we are maintaining our forecast of an August hike.
Oil and freight: Oil prices fell on peace hopes in late May, but the Strait of Hormuz remains mostly closed and a deal is proving elusive. RaboResearch has changed its baseline forecast for the strait to remain closed until September and raised Q3 and Q4 oil price forecasts to USD 120/bbl and USD 100/bbl, respectively