Australian agriculture 'well placed' for a strong year ahead: Rabobank

Despite global economic and geopolitical challenges, Australia’s agricultural sector is set to move confidently into 2025, according to Rabobank’s Australia Agribusiness Outlook 2025.

Commodity prices and production

Livestock and grain prices are expected to “fare well” in 2025, with the RaboResearch Australia Commodity Price Index forecast to rise. While prices won’t reach the highs or lows of recent years, the outlook remains positive. Soil moisture is lower than last year in many regions, but recent rains have supported feed availability in key sheep and cattle areas.

“Most cropping and dairy areas along the south coast of Australia are too dry, although many of the country’s sheep and cattle areas received rains over the past two months, supporting feed availability,” the report stated.

Report lead author Stefan Vogel, noted the winter grain harvest had “notably exceeded that of last year,” though South Australia, southern Western Australia, and western Victoria need more rain for the upcoming planting season.

“For beef and sheep producers, the outlook for farm-grown feed in the first half of 2025 overall once again looks promising,” he said.

Farm inputs and economic factors

Farm input prices, including fertilisers and chemicals, are expected to remain relatively stable, though there is “upside price risk”. Crude oil prices are forecast to drop below USD 70/bbl due to oversupply. Meanwhile, Rabobank anticipates the Reserve Bank of Australia will cut interest rates three times in 2025, providing relief for farmers.

“The global economic outlook for 2025 in many regions of the world is subdued,” Mr Vogel said, noting that while Australia’s GDP is expected to grow by 2.3%, major economies like the US and China are facing slower growth, impacting global consumer confidence.

The Australian dollar is expected to stay weak, around USc60, benefiting exports but making imports more expensive.

Commodity-Specific Insights

RaboResearch’s Rural Commodity Price Index is expected to rise above the 10-year average.

• Beef: “The beef price outlook is one of modest optimism,” Mr Vogel said, noting stronger demand from feedlots and higher live export volumes.

• Grains: “Falling global stock levels should help support wheat prices,” he said, adding that reduced Russian wheat exports and tightening global canola stocks could also boost prices.

• Dairy: “China’s dairy import volumes appear likely to improve marginally in comparison to 2024,” he said, adding that a weaker AUD will benefit exports.

Geopolitics and Shipping Risks

Geopolitical tensions remain a concern, with potential trade duties under a second Trump administration, ongoing Middle East instability, and the war in Ukraine all posing risks to agricultural markets.

“Trump 2.0 and his return as US president is expected to keep markets volatile,” Mr Vogel said, raising concerns over potential US trade duties on beef imports.

Shipping disruptions, including Red Sea piracy and potential grain market impacts from the Ukraine conflict, are also risks for 2025.

Biosecurity

The report highlights the importance of biosecurity, referencing the recent foot-and-mouth disease (FMD) outbreak in Germany. “The likes of the UK and South Korea quickly limited their livestock or livestock products trade with Germany,” Rabobank noted, underscoring the need for strong biosecurity measures.

While challenges remain, Rabobank sees strong fundamentals supporting Australian agriculture in 2025.