Agriculture outlook: Wars, US politics will shape 2027 for Australian farmers

Across agricultural markets, the common theme heading into 2027 is the significant role being played by forces outside the farm gate - from geopolitics and disrupted trade routes to energy markets volatility, and weather, CommBank Agricultural and Sustainability Economist Dennis Voznesenski says.

Politics and conflict are set to remain increasingly important drivers of the outlook for Australian farmers next year, he said in his 2027 price outlook report. 

“The level of market interference from politics has reached new heights in 2026. 2027 is expected to be no different,” Voznesenski said.

And the influence of US domestic politics in the wake of the US midterm elections, will also be key next year, he said. 

“The impact of the US midterm elections on both active conflicts, Ukraine-Russia and US-Iran, will be critical to watch.”

The conflicts also have implications beyond commodity markets, including for farm input costs.

“An end to the US-Iran war would reduce fertiliser and fuel prices, supporting farm profit margins,” Voznesenski said.

Black Sea access key for grain markets 

For wheat and barley, shipping access to the Black Sea will be one of the biggest issues to watch.

“The operational status of Black Sea ports will be the largest deciding factor for global grain price direction in 2027,” Voznesenski said.

Russia and Ukraine have been expanding alternative export routes as Black Sea trade has been disrupted since July. However, those alternatives face constraints, while global wheat stocks are also expected to tighten.

“While recent news headlines have focused on a peace deal or at least a grain deal, the governments of both countries have actively been focusing on increasing export capacity through non-Black Sea avenues, potentially signalling that the likelihood of a prolonged Black Sea port closure is growing,” Voznesenski said. 

China will also be important for barley markets after a record corn harvest contributed to weaker demand for imported feed grain.

“Chinese demand for Australian barley will also be a critical price driver,” Voznesenski said.

Conflict and biofuels support canola

Canola is another commodity being influenced by geopolitics, via the relationship between conflict, oil prices and biofuel production. 

“Global canola prices have been supported this year by strong biofuel demand, driven by a combination of favourable government policy and high oil prices due to conflict,” Voznesenski said.

“Both the Ukraine-Russia and US-Iran conflicts will continue to play an important role in determining canola prices via oil prices.”

Canadian supply will also be important, with increased domestic processing leaving less canola available for export and potentially increasing Australia's role in global markets.

Pulse markets diverge 

Conditions across pulse markets are markedly different.

Australian chickpea production has fallen sharply following reduced planting and dry conditions across northern NSW and southern Queensland, while Indian demand has provided support.

“Looking toward the next 12 months, the biggest price driver will be Indian production and consequently import duty policy,” Voznesenski said.

Lentils face downward price pressure due growing supplies, with Australian production expected to reach a second consecutive record and plentiful Canadian supplies adding to export competition. 

Cattle supported by rainfall and global demand

For graziers, Australian cattle markets are benefiting from improved seasonal conditions at home and herd rebuilding in major overseas markets.

“Favourable rainfall across South Australia, Victoria and southern NSW this year has allowed farmers to begin rebuilding their herds and reduce available cattle for slaughter,” Voznesenski said.

“US demand for Australian beef is expected to continue to be resilient in 2027 due to a declining US cattle herd and strong demand.” 

Brazilian herd rebuilding could also reduce competition from Brazilian beef exports, while demand from China is expected to remain an important influence.