Politics to play a bigger role in agri markets as global tensions rise

Geopolitics, trade policy and government intervention are set to play a defining role in agricultural markets in the year ahead according to CBA’s 2026 Agri Commodities Outlook. 

Heavily export-oriented sectors such as grains, oilseeds and beef will need to navigate shifting trade settings, changing import rules and greater price volatility across key markets. At the same time, strong global competition and high stocks carried over from last year in some commodities are likely to limit upside. This will place greater emphasis on cost control, timing and risk management for farmers. 

“We’re seeing governments play a much more active role in agricultural markets, whether through trade policy, biofuel regulation or food security strategies,” said the report’s author, Dennis Voznesenski, CBA Director of Sustainable and Agricultural Economics.  

The report identifies several themes shaping agricultural markets in 2026: 

Price grain for wheat markets could be short-lived

While in the second half of 2026 CBA economists expect support for wheat prices due to a return to trend yields globally and a weaker Australian dollar, the longer-term outlook is being pushed lower by government intervention. Increased geopolitical tension, like we’ve seen with Ukraine, Venezuela and the Houthi rebel attack in the Red Sea, have led to the governments of large importing countries like China and Egypt to increase domestic production. Increased production could reduce import demand in future years and depress prices.

“When governments prioritise self-sufficiency and stockpiling, markets become less responsive to traditional supply shocks, like drought impacted crops,” Voznesenski said.

Canola prices hinge on trade and biofuel policy

Canola demand growth, coupled with reduced production is expected to push global stocks lower by 13% in 2026/27 and support prices toward year end. 

Trade policy and regulation will heavily shape the trajectory for Australian canola prices this year.

China’s tariffs on Canadian canola, European restrictions on certain agricultural chemicals, and upcoming decisions on US renewable fuel policy are all expected to influence price direction for Australian producers.

Carry over global stocks are expected to cap price gains early in 2026, with stronger pricing more likely later in the year, particularly if demand from China improves and biofuel policy settings become clearer in the US.

Livestock markets face a more volatile year

After a strong 2025, Australian cattle markets are expected to experience a more uneven year ahead.

Recent policy changes in both the United States and China have altered global beef trade flows. The removal of US tariffs on Brazilian beef and China’s introduction of country-specific beef import quotas are expected to weigh on demand for Australian exports.

While strong US consumer demand and possible herd rebuild should provide support early in 2026 for slaughter-ready cattle, prices for heavy steers are expected to soften once China’s beef import quota is filled. Demand for processor cows, who’s meat frequently ends up in hamburgers, should remain more supported past this point due to strong US demand for this type of beef.  

“Last year was exceptional for cattle prices across the board, but some of the key tailwinds have now turned,” Voznesenski said.

“Trade policy changes in both the US and China mean price gains in 2026 are likely to be less consistent.”

Barley and pulse markets remain well supplied

Barley and pulse markets are expected to remain well supplied in 2026, limiting price upside.

Barley supplies are forecast to ease from last year’s highs as yields normalise, but demand, particularly for malt barley, is expected to remain subdued. Pulse markets continue to face large carry-over stocks following record production, with prices sensitive to trade policy and seasonal risks rather than demand growth.

“Barley and pulses are coming off strong production years, and that surplus will continue to weigh on prices in 2026” Voznesenski said. “For pulses, Indian import policy and weather outcomes will be the main swing factors.”

Implications for the Australian agricultural industry

The 2026 outlook points to a more complex operating environment for Australian producers, where policy decisions and geopolitics will play a larger role alongside seasonal conditions.

“For Australian producers, 2026 is less about chasing higher prices and more about managing all the volatility,” Mr Voznesenski said. “Understanding policy risk, diversifying markets and staying disciplined on costs will be critical.”

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