Bendigo Bank’s recent report on the Australian agriculture sector signals a broadly positive outlook for farmers as they head into the first half of 2026. The report, released on December 9, 2025, outlines expectations for supply, demand, and pricing across major agricultural commodities, emphasizing key factors such as seasonal conditions and economic trends that will shape the industry.
Australia’s agriculture sector is heavily reliant on exports, with approximately two-thirds of its products sold internationally. Consequently, the report notes that global market volatility will significantly influence growth prospects, reinforcing the need for robust and diverse trade relationships. According to Eliza Redfern, Senior Manager of Industry Insights at Bendigo Bank Agribusiness, “Seasonal risk and economic uncertainty remain at the forefront, but the outlook for Australian agriculture is broadly positive as we move into 2026.”
While rising on-farm costs may challenge the production of vegetables and milk, the report highlights promising areas such as sheep and wool supply, alongside strong export demand for beef and certain crops. Specifically, the forecast for Australia’s total winter crop production for the 2025/26 season is now estimated at 62.3 million tonnes, marking a significant 12 percent increase from mid-year projections.
Commodity-Specific Insights
The beef sector, while expected to see a slight drop in production from 2025’s high volumes, is anticipated to maintain firm prices due to strong demand, particularly from international markets. The reduced supply in the United States is expected to bolster Australia’s position as a preferred supplier in Asia, even as the US lifts tariffs on Brazilian beef.
In the cropping sector, initial pressures on wheat prices are projected to ease as demand from Southeast Asia picks up in the second quarter of 2026. Barley and canola are expected to dominate exports in the early part of the year, with a historical peak in demand for feed grains driven by high-output levels across intensive farming sectors.
The dairy industry faces mixed prospects, with a slight decline in milk production anticipated—estimated to fall by one to two percent to around 8.2 billion litres. Despite an easing in the outlook for farmgate milk prices, the high input costs for fodder and fertilisers remain a critical concern.
In horticulture, the report reflects a less favourable outlook compared to 2025, driven by uncertain export demand and high costs. However, both fruit and nut production are expected to remain robust, while vegetable output may suffer from increased irrigation expenses.
Regional Highlights Across Australia
In Queensland, the cattle industry remains optimistic as export demand supports local prices. The state’s grain growers report a final winter crop production of 3.8 million tonnes, which, despite being down five percent from last season, reflects a positive harvest experience overall.
New South Wales farmers expect stable conditions at the start of 2026, with wheat markets showing resilience. Lamb prices, while anticipated to ease from record highs, are projected to remain historically strong due to limited supply and solid demand.
Victoria’s harvest has started slowly, with yields currently trailing the five-year average. Nevertheless, the state anticipates delivering a significant crop of 8.5 million tonnes, although prices may face downward pressure as the harvest progresses.
In South Australia, a slow harvest start has led to temporary lifts in cash prices for feed grains. The state is projected to yield 8.37 million tonnes of crops, slightly above the ten-year average. Lamb prices are expected to remain historically strong despite an anticipated increase in supply.
Western Australia is witnessing a remarkable harvest, with predictions of record grain production exceeding 26 million tonnes. Additionally, avocado growers are optimistic about a substantial crop, although milk production continues to lag behind last year’s levels.
Tasmania leads the nation in milk production recovery, supported by improved rainfall and irrigation conditions. However, the forecast for lamb prices suggests a decrease from recent highs, albeit still remaining strong due to ongoing export demand.
As Australian farmers look towards 2026, the insights provided by Bendigo Bank’s report highlight both the challenges and opportunities that lie ahead, underscoring the importance of adaptability in a fluctuating global market.
