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Summary
Australia’s ABARES projects a mixed outlook for agricultural commodities in 2026. While cereals are expected to remain under pressure due to record global supplies, oilseeds and some soft commodities are likely to see firmer prices. Overall, prices received by farmers are forecast to rise, supported by stronger livestock returns despite weakness in grains and industrial crops.
ABARES Flags Diverging Trends Across Commodities
ABARES expects agricultural markets in 2026 to move in different directions.
ABARES projects that prices received for agricultural commodities will rise 6.4%, even though cereals are likely to remain bearish. Soft commodities and oilseeds, however, are expected to perform better amid tighter balances and rising consumption.
Cereals Face Pressure From Record Global Supplies
Cereals are expected to remain under pressure as global production continues to outpace demand.
Cereals outlook shows global wheat production rising to a record 828 million tonnes in 2025–26, driven by higher output across most major producers. Consumption for food and feed is also increasing, but not fast enough to prevent global stocks from rising to multi-year highs.
Higher inventories are expected to weigh on prices, although ABARES believes most cereal prices may have already bottomed out, limiting further downside.
Grain Prices Forecast to Drift Lower
Grain price projections from ABARES indicate moderate declines across major coarse grains:
- Corn (US Gulf) down 2% to US$195/tonne, the lowest since 2019–20
- Feed barley (France, Rouen) down 3% to US$212/tonne
- Sorghum (US Gulf) down 8% to US$210/tonne, reflecting reduced access to the Chinese market
Grain demand for feed and industrial use is expected to provide some support, preventing sharper price falls.
Oilseeds Supported by Consumption Growth
Oilseeds are forecast to outperform cereals as rising consumption outweighs higher production.
Oilseed demand is being driven by increased use of vegetable oils for food, higher biodiesel production, and stronger protein meal demand for livestock feed. While production is projected to rise 2% to 688 million tonnes, consumption growth is expected to absorb much of the increase.
Canola and Soybean Prices Expected to Rise
Canola prices are forecast to strengthen across major origins:
- World canola (Canada, Vancouver) at $496/tonne
- EU canola (France, Moselle) up 2% to $555/tonne
- Australian canola export (Kwinana FOB) up 5% to $547/tonne
- Australian canola (Melbourne, port-delivered) at A$793/tonne
Soybean prices are also forecast to rise 3% to $426/tonne, even as Brazil is expected to harvest a near-record 177 million tonnes. Global soybean output may dip slightly to 428 million tonnes.
Trade uncertainty around Chinese tariffs on US soybeans and Canadian canola is adding volatility to oilseed markets.
Cotton Prices Weighed Down by Demand Weakness
Cotton markets are expected to soften in 2026.
Cotton prices are forecast to fall 3% to 77 US cents per pound (Cotlook A Index), driven by declining consumption and rising production. Demand is being hurt by lower Chinese usage and increasing competition from synthetic fibres.
Falling cotton apparel prices have squeezed margins for clothing manufacturers, further weighing on global cotton demand.
Sugar Outlook Balanced Despite Rising Production
Sugar supply is forecast to increase 3% in 2025–26, led by higher output in key producing countries.
Sugar production trends include:
- Brazil recovering output, though ethanol production remains more profitable, posing upside price risks if cane diversion increases
- Thailand expanding production due to higher planted area and favourable weather
- India seeing higher output following above-average monsoon rainfall, with export allowances of 1.5 million tonnes boosting global supply
Global sugar demand is expected to remain stable, with population growth offset by slower economic growth in China and Indonesia.
Farm Economics Shaped by Costs and Livestock Gains
Farm input prices are forecast to rise 5%, increasing cost pressures.
Farm incomes are expected to be supported by stronger livestock prices, which are projected to more than offset declines in grain and industrial crop prices.
Farmgate horticulture prices are forecast to fall due to higher production, even though vegetable and fruit consumption is expected to increase. Consumption levels, however, remain below pre-COVID benchmarks.
Conclusion
ABARES’ outlook points to a year of divergence rather than uniform trends in agricultural markets. While cereals may struggle under the weight of record supplies, oilseeds and select soft commodities offer stronger price prospects. Livestock gains are expected to support farm incomes, but rising input costs and uneven demand will keep margins under pressure. For agri-market participants, 2026 will require careful commodity-specific strategies rather than broad-based optimism.