Australia agribusiness April 2025: Navigating uncertainty

Wheat and barley: Global wheat markets faced challenges due to dry conditions in key areas and geopolitical factors, while Australian wheat prices were influenced by export pace and competition. Future prices depend on grain sales and recent rains may indicate another robust crop.

Canola: China imposed 100% tariffs on Canadian canola oil and meal, significantly impacting the market already strained by US-Canada tariff disputes. This led to a sharp drop in prices and raised questions about future marketing strategies amid global soybean supply pressures and weather conditions.

Dairy: Pressure continues to build on Australian milk production as unfavourable seasonal conditions continue to impact a wide range of regions. Despite a strong start, production is down marginally so far this season. The key to the new season will be a favourable autumn rainfall to provide a solid feed base.

Beef: Rains in late March through large areas of Queensland and northern Australia will reduce the sale pressure some producers were facing with a poor wet season. This should help support Australian cattle prices over the next month as export volumes continue to push new records.

Sheepmeat: Lamb and mutton prices are holding, despite ongoing high levels of production. There are some glimmers that China is improving but at the same time a possibility that the US is weakening. The autumn break will be key to determining producer stocking intentions and in turn domestic lamb prices.

Cotton: ICE #2 Cotton futures traded with volatility over the past 30 days, as market participants weigh up bearish macro factors and tariff risks against drought in the key US growing state of Texas.

Wool: It was another positive month for wool prices, with the Eastern Market Indicator (+4%), and the Western Market Indicator (+3%) both rising month-on-month.

Consumer foods: Reports from the Australian Bureau of Statistics showed that Australian household wealth increased in Q4 2024 which is positive news for the consumer economy. However, growth in household wealth slowed in the back half of 2024 on the back of a cooling property market.

Farm inputs: Urea prices declined an eye-watering 12% in Australian dollar terms month-over-month, as Indian demand failed to meet market expectations. The question is, where next for markets given uncertainty regarding Chinese export policy and global demand?

Interest rate and FX: RaboResearch has revised up its 12-month AUD/USD forecast to 0.6500 but sees some scope for near-term weakness in the exchange rate. We continue to forecast RBA rate cuts in May and August this year.

Oil and freight: Oil prices are set to face pressure from increased OPEC+ supply in April. The futures curve points to sub-USD 70/bbl prices by year-end, and RaboResearch sees prices averaging USD 71/bbl in Q2.