Philip HOPKINS
STRONG production estimates, relatively steady commodity prices, and global economic growth provide a positive immediate future for Australian farmers over the next six months, according to the Australian Agricultural Outlook 2025, a report by Bendigo Bank and Rural Bank.
Three main themes will affect the farming outlook, according to the report: seasonal conditions, trade conditions, and economic growth prospects.
The outlook for the major agriculture sectors are:
Cattle: A lift in beef production and strong export demand give a positive outlook, even with softer pricing;
Dairy: Producers face tighter margins with lower farmgate prices but improving local production and appreciating global prices provide a cautiously optimistic outlook;
Horticulture: Above average production and positive demand will offset lower domestic prices. High production costs continue to weigh on margins across the sector;
Sheep: Prices to remain relatively firm above the five-year average levels, being supported by a slowdown in supply and strong export demand;
Wool: The Australian wool industry is expected to remain in a holding pattern until economic conditions allow consumer demand to increase, and;
Cropping: Above average production combined with ongoing volatility in the global grains sector will create marketing opportunities.
Current estimates by the Bureau of Meteorology are for above average rainfall likely for large parts of eastern Australia over the first quarter of 2025.
With about two-thirds of Australian agricultural products exported, the supply and demand dynamics of global markets remain key to ongoing growth across the sector, the report said.
Beef production is forecast to lift marginally over the next six months as slaughter rates and processing capacity improves. Demand for Australian beef is set to remain firm as the US reduction in supply favours Aussie producers. Australian cattle prices will marginally ease across the first half of 2025 due to high supply.
“A life in beef production and strong export demand gives a positive outlook, even with softer pricing,” the report said.
Australian milk production is forecast to reach about 8.5 billion litres at the end of the 2024/25 season. This is a 1-1.5 per cent rise and would put production close to the five-year average of 8.54 billion litres.
“Monthly production this year has been an average two per cent higher than last year,” the report said.
Global milk supply is expected to remain largely stagnant in the coming six months. The European Union herd continues to decline as slim margins, restrictive environmental regulations and ongoing effects of bluetongue disease see farmers reducing their herds or exiting the industry.
“This is somewhat offset by consistent growth in cow productivity, but milk output is still forecast to decline marginally from 2024 to 149.6 million in 2025.”
US production will rise as herd numbers increase, but annual production will remain relatively flat. New Zealand output continues to bounce back after a couple of years of below average production, with production five per cent higher than last year.
Australia’s domestic demand will remain consistent, while global demand will be volatile. Farmgate prices are unlikely to see further step-ups, but global prices will make moderate gains.
While local prices aren’t likely to lift further, improving local production and stronger global pricing provide optimism for the 2025/26 season.
In horticulture, the outlook remains broadly positive, with irrigation remaining a key driver of production. Labour supply is improved, with backpacker numbers at record levels, although sourcing workers is still a concern, with 34 per cent of employers struggling to recruit labour, according to the National Farmers Federation Horticultural Council.
A low Australian dollar, decent quality and moderating inflationary pressure will lift both export and domestic demand. Fruit and vegetable prices are expected to ease slightly on the back of strong supply. Above average production and positive demand will offset lower domestic prices continue to weigh on margins across the sector.
Australian lamb supply will be lower than the first half of 2024 but above the levels of the past six months. Improved economic conditions domestically and from Australia’s trade partners will support demand, but Australian lamb prices will be steady to marginally lower but should remain above five-year average levels.
“Firm prices and more favourably seasonal conditions should support the industry into 2025,” the report said.
Australian wool supply is expected to remain below last year’s levels due to the decline in the national flock. Demand will stay weak until economic conditions improve in China and Europe.
Wool prices will be relatively stable as the market waits for an uptick in consumer demand.
“The Australian wool industry is to remain in a holding pattern until consumer spending increases,” the report said.
