Australian agribusinesses are well-positioned for 2025 despite anticipated rising geopolitical tensions, a sluggish Asian economy leading to low consumer confidence, and a volatile energy market. According to Rabobank’s January 2025 Food and Agribusiness report, these factors are expected to create a dynamic and challenging year.

Travis Wentriro, Regional & Rural Network Manager at Raine & Horne Group, commented that the Rabobank report provides key insights for the agricultural industry, noting, “These factors can significantly influence the buying and selling of agricultural holdings in 2025.”

Livestock product prices are predicted to perform well in 2025, with grain prices also showing upside potential, according to the rising RaboResearch Australia Commodity Price Index forecast. However, soil moisture levels are lower than last year, with most cropping and dairy regions along Australia’s southern coastline too dry. Recent rains in sheep and cattle areas have improved feed availability. The rain forecast for the next three months suggests similar conditions, but this may be mitigated if rainfall arrives during the growing season.

Farm input costs, such as fertilisers and plant protection chemicals, might remain stable but hold upside price risk, while crude oil prices might come off their recent five-month high.

Rabobank successfully predicted that the RBA would cut interest rates in February. “We expect the RBA to make three small 0.25 basis point reductions in 2025, as global geopolitical headwinds might keep inflation and interest rates higher for longer. The global economic outlook for 2025 is subdued in many regions of the world, with Australia’s GDP growth recovery to 2.3% in 2025 being almost an exception,” noted Rabobank.

Major economies, including the US (2.0% growth versus 2.7% in 2024) and China (4.7% versus 4.8%), are expected to struggle, dampening consumer confidence. The Australian dollar is forecast to stay weak near US0.60, benefiting Australian exports but raising import costs. Australia’s tight labour market may soften.

Australia’s major agricultural sectors are poised for a strong year. The recently harvested grain crop surpassed last year’s, though soil moisture levels in South Australia, southern WA, and western Victoria need monitoring for planting. Beef and sheep producers have a positive outlook for farm-grown feed in early 2025. Commodity prices are expected to remain stable, avoiding the extreme highs and lows seen in recent years.

Geopolitical issues and some shipping routes impacted by piracy also remain areas of concern. Moreover, Rabobank noted that Donald Trump’s return to the US presidency and the potential for US import duties on Australian beef, a key export, will create some uncertainties.

Likewise, the Middle East conflict and Red Sea piracy will impact shipping routes and drive volatility in 2025. Russia’s actions in Ukraine could also disrupt grain exports, further impacting global grain markets.

Globally, farm input prices for fertilisers and plant protection products are forecast to remain stable or increase slightly. Global urea and phosphate prices have moved upward from their Q2 2024 lows in Australian dollar terms. As Australia imports most fertilisers, the weaker Australian dollar has been a key driver in this increase.

Looking ahead to 2025, Rabobank doesn’t expect very significant price swings but sees more upside than downside price risk. Costs on Australian farms are expected to remain well above pre-pandemic levels.

Travis Wentriro added, “While geopolitical and economic uncertainties may create volatility, the strength of Australia’s major agricultural sectors and the positive outlook for livestock and grain prices should support rural property values.

“A steady demand for high-performing agricultural holdings is likely, particularly in regions with strong rainfall and feed availability. However, areas facing ongoing dry conditions may see more cautious buyer sentiment.”

If you’re considering buying or selling rural property in 2025, contact your local Raine & Horne Rural office for expert advice and more information.