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Australia heading towards record-high winter crop planting - Rabobank

Rabobank

Australia’s farmers are heading towards a record-high winter crop planting this year, Rabobank says in its newly-released 2025/26 Australian Winter Crop Outlook.

 

The annual outlook, by the agribusiness banking specialist’s RaboResearch division, says the nation’s grain growers are expected to plant an estimated 24.5 million hectares of winter crop this year, up 0.8 per cent on last season.

 

The forecast increase is largely driven by good soil moisture levels in northern New South Wales and Queensland, as well as a “positive gross margin outlook” for most crop types.

 

Area planted to crops is expected to be up in all states, except for South Australia – where many regions have been struggling with severe drought conditions. Victoria – which has also been impacted by drought in many western parts of the state – is expected to see cropping area edge up only fractionally.

 

The overall rise in national planted area is expected to benefit most crops, except for wheat, where area is forecast to drop – especially in Western Australia – impacted by rising fertiliser prices and less optimistic market prospects.

 

Despite the projected overall increase in Australia’s winter cropping area, RaboResearch is currently forecasting total production for the 2025/26 harvest to come in below last year, at a “base case” of 53.9 million tonnes, compared with 59.7 million tonnes for last year’s crop.

 

Report author, RaboResearch senior analyst Vitor Pistoia said Australia’s 2025/26 winter cropping area may be “the largest on record” if a “seasonal break comes soon in South Australia and western Victoria”. However, the impact of weather on the season ahead has led the bank to expect there would be a slightly reduced amount of grain heading to the bins at harvest time.

 

“Summer rainfall in Queensland and northern New South Wales was above average, leading to flooding in some cropping regions and this may delay sowing, but is supportive for another season of large sowing areas. WA’s southern cropping areas also received timely rainfall to have a good start to the season,” Mr Pistoia said.

 

“Other cropping regions around the country though, did not get the same summer luck.  Soil-moisture levels are generally insufficient, especially in South Australia, western parts of Victoria and southern New South Wales.”

 

As of mid-May, the weather outlook for the season ahead is for average rainfall for the eastern states and some chance of above average rainfall for Western Australia by spring time, he said.

 

Seeding – ‘Wheat makes room for barley and pulses’

 

Area planted to wheat is expected to decrease 5.2 per cent on the previous year, to 12.6 million hectares, the report says. The most significant drop in wheat planting is anticipated in Western Australia, Mr Pistoia said.

 

“Overall, this decline in wheat planting is attributed to rising fertiliser prices and less enthusiasm about the outlook for wheat prices,” he said. “Crop rotation is also a factor, as last year’s late seasonal break led to wheat replacing canola and pulses at the eleventh hour and those farmers will now be looking to plant a different crop.”

 

RaboResearch expects cropping area for barley to increase 9.8 per cent year-on-year to 4.5 million hectares, supported by strong demand for livestock feed from the local animal protein sector.

 

“Despite gross margins for barley expected to be within historical averages, it is a promising outlook for regions that can achieve higher yields with barley than wheat, as the price difference between the two commodities is comparatively small,” Mr Pistoia said.

 

Canola planting is projected to remain “virtually stable” – with just minimal forecast area growth of 0.4 per cent on last year to 3.2 million hectares, seeing increases in Western Australia and declines in the eastern states.

 

“There is a supportive outlook for canola, although the price direction varies between genetically-modified (GM) and non-GM canola,” Mr Pistoia said. “Geopolitical turmoil is pressuring the GM-canola market, while demand from the EU is driving non-GM fundamentals.”

 

Pulse plantings are also expected to be up considerably – by 12.5 per cent on last season – to 3.4 million hectares, with Western Australia and Queensland likely to lead the expansion in pulse area.

 

This is driven by tariff announcements in key pulse markets – including India, a country crucial to Australian pulse exports – that indicate demand will remain steady. “Such positive overseas’ demand signals may lead to higher margin potential compared with cereals,” Mr Pistoia said.

 

States

 

Queensland looks to be the big winner in terms of increased cropping area, with excellent soil moisture setting the stage for a promising season, the RaboResearch report says. Area under cropping is forecast to expand 8.4 per cent on last year, to a total of 1.67 million hectares.

 

Western Australia is expected to be the other big winner, with cropping area projected to increase 2.1 per cent to 8.83 million hectares, despite the reduction in the amount of wheat planted in the state.

 

New South Wales is a “mixed bag”, the report says, with positive soil moisture in the northern parts of the state, after a wet summer, driving expansion while cropping areas in southern regions have been impacted by low soil-moisture levels. Overall though, cropped hectares in the state are projected to increase this season by 1.6 per cent to 6.83 million hectares.

 

Dry weather in the western parts of the state is seeing cropping programs across Victoria being diversified this season, the report says. “While some farmers are going for a ‘high input, high return’ approach, with crop rotation edging towards an evenly split ratio of canola and cereal cropping area, others are still using crop rotation as a tool for mitigating risk, with pulses and hay in the cropping mix as well,” Mr Pistoia said.

 

Overall, Victorian cropping area is expected to increase just 0.1 per cent on the previous season, to 3.61 million hectares.

 

Ongoing severe dry weather conditions in South Australia are expected to see the state’s cropped area decline this season, by 5.8 per cent to 3.55 million hectares, the report says. Mr Pistoia said big planting shifts were also anticipated in the state, with increasing lentil planting.

 

“Given the average yields and current commodity price outlook, lentils offer a more attractive gross margin potential than wheat or canola in many parts of South Australia for the 2025/26 season,” he said.

 

Market outlook/exports  

 

In terms of market outlook, the report says, “despite the US’s tariff-driven efforts to re-order global trade, Australia’s key grain and oilseeds exports seem largely unscathed for now and may gain global market share”.

 

“Asian countries rely on Australia to source imports of grains and pulses, and the EU imports canola to balance its supply of oilseeds,” Mr Pistoia said.

 

The bank says Australia exported most grains and oilseeds at a good pace in early 2025, although not wheat. Wheat export volumes from October 2024 to March 2025 reached 9.9 million tonnes, the report said, falling 3.1 million short of the pace needed to avoid an increase in year-on-year carryover stock.

 

A larger carryover would make local ASX (Australian Stock Exchange) wheat futures prices softer compared with the global CBOT (Chicago Board of Trade) and MATIF prices, Mr Pistoia said.

 

Globally, with increased wheat supply from the EU and another robust Black Sea crop likely, there are not many reasons to be bullish on wheat prices, the report says. 

 

For Australia, RaboResearch forecasts APW port prices to range between AUD 330 and AUD 360 per tonne by the end of 2025, partially supported by currency headwinds.

 

Feed barley prices for the 2025/26 harvest are anticipated to range between AUD 290 and AUD 340 per tonne, the report says, depending on new crop production.

 

On the malting barley front – where there is limited upside beyond Chinese demand, RaboResearch says – prices are projected to be AUD 10 to AUD 20 per tonne higher than feed barley.

 

Canola prices are expected to soften by mid-year as harvests begin in the northern hemisphere. “If EU production falls below 18 million tonnes, Australian non-GM port prices for the 2025/26 season are likely to stay within the AUD 700 to AUD 780 per tonne range, with an eight to 12 per cent discount for GM canola,” Mr Pistoia said.

 

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Rabobank Australia & New Zealand Group is a part of the international Rabobank Group, the world’s leading specialist in food and agribusiness banking. Rabobank has more than 125 years’ experience providing customised banking and finance solutions to businesses involved in all aspects of food and agribusiness. Rabobank is structured as a cooperative and operates in 38 countries, servicing the needs of more than nine million clients worldwide through a network of more than 1000 offices and branches. Rabobank Australia & New Zealand Group is one of Australasia’s leading agricultural lenders and a significant provider of business and corporate banking and financial services to the region’s food and agribusiness sector. The bank has 87 branches throughout Australia and New Zealand.