Agricultural exports remain fundamental to both the Australian and New Zealand economies, contributing more than $55 billion and $20 billion respectively in annual export value. The outlook for 2026 varies significantly across different commodities based on production forecasts, global demand patterns, and currency movements.

Dairy represents New Zealand’s largest agricultural export sector. Fonterra’s early production forecasts suggest the 2025-26 season will see milk solids production relatively flat compared to the previous year, with global dairy prices moderating from the highs seen in early 2025. The key variable is Chinese demand, which has been softer than expected as domestic Chinese dairy production expands and economic growth slows. Current futures prices suggest a milk price around NZ$8.00-8.50 per kilogram of milk solids, which would provide reasonable but not exceptional returns for farmers.

Australian wheat production for 2025-26 is forecast at 27-29 million tonnes, assuming average seasonal conditions. This would be a solid but not exceptional crop. Global wheat markets remain volatile due to production uncertainties in the Black Sea region and changing trade patterns. Australian wheat’s premium positioning—particularly for high-protein milling wheat—provides some price stability, but commodity-grade wheat faces margin pressure from abundant global supply.

Beef exports from Australia face challenges in 2026. Herd rebuilding following the drought-liquidation cycle means fewer cattle available for slaughter. Live export restrictions limit some market options. Competition from Brazilian and US beef in key Asian markets remains intense. Prices are likely to stay elevated due to tight supply, but export volumes will constrain total revenue growth. New Zealand beef exports face similar dynamics on a smaller scale.

Lamb and mutton exports from New Zealand continue to find strong demand, particularly in China where lamb consumption has grown significantly. Australian sheep meat exports are recovering as flock numbers rebuild. The challenge is that production expansion takes time—sheep breeding cycles mean today’s decisions affect supply years from now. Current forecasts suggest modest volume growth in 2026 with stable to slightly higher prices.

Wine exports from both countries continue to adjust to post-pandemic demand patterns. Premium wines are holding value reasonably well, but commodity wine faces oversupply issues. Australian wine’s ongoing partial recovery in the Chinese market provides upside, but that market is unlikely to return to previous peaks. New Zealand wine exports have been redirected toward European and North American markets with mixed success.

Horticultural exports show diverging patterns. New Zealand kiwifruit exports continue to expand as Zespri adds new production and maintains strong returns. Australian citrus exports are finding growing demand across Asia. Avocado markets remain oversupplied with pressure on prices. Almond exports from Australia face competition from expanding Californian production as that region recovers from drought.

Cotton production in Australia is highly weather-dependent. Early forecasts suggest a reasonable 2025-26 crop assuming average rainfall in key growing regions. Global cotton demand links closely to textile manufacturing activity, particularly in China and Southeast Asia. Current indicators suggest modest demand growth.

Canola exports from Australia depend heavily on production outcomes, which vary dramatically based on seasonal conditions. European demand for canola oil remains strong, driven partly by biofuels policy. Canadian production represents the main competitive factor.

Sugar exports from Australia continue to face a market where global supply growth outpaces demand increases. The marginal cost producer tends to set prices, which creates limited upside for Australian producers despite their efficiency advantages. Policy changes around sugar subsidies in major producing countries significantly impact this market.

Wine, wool, and several specialty agricultural products share a common challenge—they’re discretionary purchases vulnerable to economic slowdowns in importing countries. If major economies enter recession in 2026, these sectors would likely face demand destruction even if production is strong.

Currency movements create another layer of uncertainty. A weaker Australian dollar benefits exporters by improving price competitiveness and increasing AUD returns on USD-denominated exports. The NZD faces similar dynamics. Current forecasts suggest both currencies remaining relatively weak against the USD through 2026, providing tailwinds for exporters.

Climate variability remains the wildcard. Agricultural production forecasts assume average seasonal conditions, but recent years have demonstrated anything but average weather patterns. El Niño/La Niña cycles, unexpected frost events, floods, and droughts can dramatically shift production outcomes. Smart exporters are using more sophisticated forecasting tools that incorporate climate modeling, though these remain imperfect.

Input costs will significantly impact farm profitability in 2026. Fertilizer prices have moderated from recent peaks but remain elevated compared to historical averages. Fuel costs fluctuate with global oil prices. Labor availability and costs continue to pressure horticultural sectors particularly. The relationship between commodity prices and input costs determines profitability more than prices alone.

Trade policy changes represent ongoing risk. Any escalation in trade tensions between major economies could disrupt established export patterns. Conversely, new trade agreements could open opportunities—Australia’s trade agreement with India includes agricultural provisions that could drive growth if implementation proceeds smoothly.

The overall outlook for 2026 agricultural exports from Australia and New Zealand is moderately positive but not exceptional. Reasonable production volumes, stable to soft prices across most commodities, and currency support should deliver solid export revenue. The sectors to watch are dairy (dependent on Chinese demand recovery), beef (constrained by supply), and wine (still finding equilibrium post-China restrictions).

For individual businesses, the aggregated outlook matters less than specific commodity dynamics and individual operational efficiency. The data suggests 2026 won’t be a breakthrough year but shouldn’t be catastrophic either—assuming no major production failures or demand shocks.