A combination of favourable weather, rising global demand and a weaker Australian dollar set the stage for a strong 2025 for Australian farmers, with beef and wheat producers poised to be among the biggest winners.
Agricultural value on the rise
The Australian Bureau of Agricultural and Resource Economics (ABARES) forecasts the overall value of agriculture to increase by $6 billion to $94.3 billion for the 2024-25 financial year.
This would mark the second-highest production on record, driven by strong performance in cropping and livestock sectors.
Agriculture remains a crucial export industry for Australia, with more than 70% of its output destined for international markets. In the last financial year, the industry generated $60 billion in export revenue.
Beef industry: rebound in prices
Cattle farmers are expected to benefit significantly as global beef prices rebound. The United States, the world's largest beef producer, is facing historically low livestock numbers due to severe droughts in key cattle regions.
If rainfall replenishes pastures in the US, farmers there are likely to rebuild herds, reducing domestic supply and boosting the need for imports.
Commonwealth Bank agriculture economist Dennis Voznesenski said these conditions could make Australia a major beneficiary as beef prices rise.
Australia's beef exports to the US surged by 65% in 2024, with the US accounting for a quarter of Australia’s total beef exports.
Meanwhile, cattle prices, which ended 2024 at $6.84 per kilogram, are projected to rise from their previous peak of $8.50 in 2023.
Wheat: a crop to watch
Wheat prices are also expected to climb in 2025, with global supply tightening.
ANZ director of agribusiness Michael Whitehead highlighted that the global stock-to-use ratio for wheat had dropped to 19%, a rare occurrence that pointed to an impending price surge.
Disruptions from adverse weather in major export regions, including Russia, Ukraine and North America, could also further constrain supply.
CBA’s Voznesenski predicts wheat prices could rise by 10% this year, while developments in the Russia-Ukraine conflict remain a key variable. A truce in the region, responsible for a third of global wheat exports, could dampen prices.
Challenges in dairy and wool
In contrast, the dairy and wool sectors face ongoing challenges. Australian milk production and dairy cattle stock continue to decline, with farmers increasingly shifting to more profitable ventures like cheese and beef.
However, Rabobank head of agricultural commodities Stefan Vogel noted that milk prices remained historically strong, ensuring profitability for many producers.
The wool industry, however, struggles with falling demand from China, its largest market, and increased competition from synthetic fibres.
Further complications could arise if the US imposes tariffs on Chinese-manufactured garments, potentially impacting Australian wool exports.
Outlook for 2025
Overall, 2025 holds promise for many Australian farmers, with favourable weather, export-driven demand and global market dynamics aligning to boost key sectors like beef and wheat.
However, challenges in dairy and wool underscore the sector's variability, as global trends continue to shape its trajectory.