A geopolitical storm of fast-changing global trade rules and volatile prices will test Australia agricultural exporters this year, a new report says.
But the report’s published, global agribusiness bankers Rabobank, says Australian agribusiness is strong enough to navigate these global challenges.
The report’s lead author and company general manager, Stefan Vogel points out that the recently-harvested winter grain crop was “the second largest on record (about 10% above last year) while meat exports (including beef and sheep) remain resilient despite geopolitical tensions and tariffs”.
“Livestock product prices are forecast to hold up well although grain prices are likely to stay subdued, given abundant global grain supply and growing inventory,” he says.
GEOPOLITICAL CONCERNS
Geopolitics and shipping remain “major areas of concern”, the report acknowledges.
“With (US) President (Donald) Trump not slowing down in the second year of his second term, further geopolitical surprises are likely this year. Commodity markets, from energy to fertilisers to agri goods, may feel the effects,” Vogel says.
The report noted that Australia had benefited from strong US demand in 2025 despite Trump’s tariffs; with most tariffs on beef now gone, competition from South American beef in the US market may intensify, he notes.
“China’s newly-introduced beef import quotas present additional challenges for both Australian and Brazilian beef importers,” he says.
The report noted tariffs are in use by key trading partners even as trade agreements progress such as the EU-MERCOSUR bloc (Argentina, Brazil, Paraguay, and Uruguay) deal.
“Other trade deals, such as the EU-Australia FTA, remain distant,” Vogel says.
(The EU just announced a free trade deal with India that creates a market of almost two billion people while protecting Europe’s meat industry: click here for the story.)
“Military actions and threats, including Russia’s ongoing war in Ukraine and new military signals from the US, add further uncertainty.”
Shipping this year also remains clouded, Rabobank says.
SUBDUED ECONOMIC OUTLOOK
Australian agriculture may face a subdued global economic market this year, the report says, with GDP growth forecast to slow in the US, China and Eurozone.
RaboResearch says Australia may face modest GDP growth of 0.4% (from 1.9% in 2025 to 2.3%) this year but is wary of domestic demand.
“Domestic consumer confidence faces renewed pressure with further interest rate cuts now relatively unlikely. Based on sticky inflation, markets are even pricing in RBA rate hikes,” Vogel says.
Rabobank believes the Australian dollar will stay remain strong against the US dollar (currently weakening on the back of Trump pronouncements) which boosts import purchasing power but weakens export returns.
The report notes that the role of the US dollar is under pressure as China increasingly makes commodity purchases in renminbi and cryptocurrency stablecoins are used more globally.
“Exporters may need to prepare for shifts in global practice payments in the coming years,” Vogel says.
Click here for the Rabobank Agribusiness Outlook 2026 commodity prices list
IMPORT COSTS TO STAY HIGH
On the import costs for materials like farm fertiliser and crop protection, prices are expected to remain high for the foreseeable future.
“While still above pre-COVID levels, prices for farm inputs may be contained by slightly reduced demand due to tight global grain production margins,” Vogel says.
“However, geopolitical developments continue to pose upside risk to input prices.”
Energy markets appear oversupplied, Rabobank says, which may fuel expectations that Brent crude oil prices may trade below A$85 a barrel in 2026: “geopolitical risk remains a wildcard”, it says.
Diesel is expected to remain expensive globally due to limited refining capacity; it notes.
The report says agricommodity prices should remain “divided” this year; prices for grains, oilseeds, pulses, cotton and sugar are to stay subdued while meat, wool and dairy prices should rise.
WEATHER RISK
The weather remains a significant risk for the ag sector, the report says.
Soils are too dry across much of the country except in northern Australia, making timely rainfall critical for grain planting and pasture growth.
“The prospects for agriculture will depend heavily on how weather conditions evolve,” Vogel says.
“The Bureau of Meteorology’s long-range forecast points to warmer-than-average temperatures and near-to-below-normal rainfall through into May for much of the country except the north.
“El Nino, which typically results in drier conditions in Australia, is not off the cards, as several models are seeing chances of an El Nino pattern emerging in the second half of the year.”
The Rabobank report also notes that the Murray-Darling Basin water storage is sitting below 2025 levels.
