SOUTH Australia’s agricultural sector is well placed for the year ahead – despite expected rising global geopolitical tensions, an underperforming Asian economy resulting in low consumer confidence and a volatile energy market – Rabobank says in its newly-released annual outlook.
In its flagship Australia Agribusiness Outlook 2025, the agribusiness banking specialist says, “major agricultural sectors look set to once again move confidently into the coming year”, albeit with some challenges ahead.
The report says prices of livestock commodities are expected to “fare well” in 2025, and grain prices also hold upside potential. This is reflected in a forecast rise in the RaboResearch Australia Commodity Price Index for 2025, however, prices of most agricultural commodities are not expected to reach the highs or lows seen over the past three years.
The report, by the bank’s RaboResearch arm, noted soil moisture in many regions is lower than 12 months ago.
“Most cropping and dairy areas… are too dry, although many of the country’s sheep and cattle areas received rains over the past two months, supporting feed availability,” the report said.
Report lead author, RaboResearch general manager Australia and New Zealand Stefan Vogel, said the weather forecast for the next three months “painted a similar picture, that hopefully can still be offset if rains arrive during the growing season”.
Mr Vogel said the recently-harvested winter grain crop had “notably exceeded that of last year”, although soil moisture levels in South Australia need to be watched for the upcoming season’s planting.
“For beef and sheep producers, the outlook for farm-grown feed in the first half of 2025 overall once again looks promising,” he said.
Mr Vogel said limited price moves were expected for farm inputs – such as fertilisers and plant protection chemicals – but there is some “upside price risk”, while crude oil prices were likely to come off their recent five-month high.
The expected easing of the official cash rate (OCR) by the Reserve Bank of Australia this year would also be welcome relief for the sector, Mr Vogel said, with Rabobank now forecasting a likelihood of three 0.25 basis point reductions, from as early as February.
“The global economic outlook for 2025 in many regions of the world is subdued and Australia’s GDP growth recovery to 2.3 per cent in 2025 is almost an exception, as major economies like the US, 2.0 per cent growth versus 2.7 per cent in 2024, and China, at 4.7 per cent, down from 4.8 per cent, are expected to struggle, which hurts consumer confidence and demand in those regions,” he said.
The bank expects the Australian dollar to remain weak, near 60c USD, which benefits Australian exports, but makes imports more expensive. Australia’s tight labour market is also expected to soften further slightly.