Australia agribusiness March 2025: Tariffs start to impact markets

Wheat and barley: Global wheat prices have fluctuated due to weather and geopolitical events. Cold spells, increased US wheat area and potential peace talks in Ukraine contributed to a bearish trend, ultimately leading to a decline in CBOT prices. In the meantime, Australian prices improved as the harvest season has concluded.

Canola: The vegetable oil market recalculates supply and demand balances as global policy changes and tariffs lead to price corrections. The North America soybean and canola cropping area for 2025/26 is expected to influence the market, which is already worrisome given geopolitics.

Dairy: Firmer commodity market returns are starting to flow to the farmgate, with recent increases in farmgate prices in southern Australia. There is growing optimism that more farmgate price increases are ahead in 2025.

Beef: Cattle prices continue to hold steady, with some upside for heavy and finished cattle, off the back of stronger US import prices. Meanwhile good seasonal conditions support steady restocker cattle prices, but high cattle inventories will limit upside.

Sheepmeat: Trade and heavy export lambs continue to perform well as US import prices rise heading into a peak demand period at Easter. Store stock prices are holding, but unless there is a significant improvement in southern seasonal conditions, we do not expect much upside for these categories.

Cotton: ICE #2 Cotton futures declined 3.9% MOM as funds maintain their enormous net-short position. Although anticipated lower US production should help tighten the global supply and demand balance sheet, the market currently appears oversupplied.

Wool: The Eastern Market Indicator and the Western Market Indicator are both trading at similar levels to one month ago. The big question going forward is the extent to which Chinese import demand will be impacted by US tariffs on China.

Consumer foods: Coles had a stronger December 2024 quarter versus its major competitor in terms of same-store sales growth. Monthly food inflation ticked higher in February, driven by some higher fresh produce prices.

Farm inputs: Urea and phosphate prices remain elevated as supply issues persist. According to our affordability index, nitrogen and phosphate prices have reached unaffordable levels in many countries, which should help curb global demand.

Interest rate and FX: In February, the RBA finally delivered an interest rate cut, and the Australian dollar finished just a touch lower than it started. RaboResearch forecasts two more 0.25ppt cuts from the RBA this year, and more weakness ahead for the currency.

Oil and freight: Geopolitical risks are the only remaining upside risk for energy prices, and containerised freight rates are falling again. RaboResearch projects Brent crude oil will average USD 70/bbl in 2025.