Australian crop margins will stay under pressure heading into 2027, though strong yields in southern and western Australia are giving growers some relief, Rabobank says.
The bank’s RaboResearch division makes the call in its Field Crop Margin Outlook 2027, a global report. It says a global recovery in crop margins is expected to be “delayed and uneven” through 2027. Plenty of world supply should limit lasting price gains for grains and oilseeds, while fertiliser and crop protection costs are forecast to rise again.
“This combination leaves limited scope for broad-based improvements in profitability,” the report states.
RaboResearch says margin outcomes will diverge by crop and region.
For Australia, the 2027 outlook remains challenging. High fertiliser, diesel, and freight costs are expected to keep margins squeezed, and El Niño could weaken seasonal prospects in eastern Australia. Good conditions across much of southern and western Australia should partly offset the pressure.
Report co-author and RaboResearch agriculture analyst Oskar Mitchell said strong yield prospects in Victoria and South Australia, along with above-average production in Western Australia, should spread high variable costs over larger volumes. However, he said plenty of local supply may weigh on farmgate prices and limit the margin benefit of higher yields.
“In Queensland and northern New South Wales, below-average rainfall and weaker yield prospects leave margins more exposed to high input costs and may influence next season’s crop mix,” Mr Mitchell said.
Mr Mitchell said Australian crop gross margins entered 2026 “below historical levels”. Commodity prices were weighed down by high global grain production, while input costs were lifted by global disruptions.
“Disruptions in the Strait of Hormuz, the Red Sea and the Black Sea had coincided with Australia’s peak farm input procurement and early winter sowing, increasing growers’ concerns over input affordability and availability,” he said.
The report says some growers responded by cutting fertiliser rates and moving planted area from wheat to less input-intensive crops. Canola area stayed broadly stable nationally, despite the crop’s higher investment needs and production risk. Good subsoil moisture in some regions supported that.
Lower input use reduces upfront financial exposure.
“But may constrain yields where season conditions do not compensate for reduced crop investment,” Mr Mitchell said.
For the coming year, some growers have brought forward fertiliser purchases and expanded on-farm diesel storage to cut supply risk. Both steps raise working capital needs.
Globally, the report says the recovery path for crop margins depends on weather, geopolitics, and crop fundamentals. El Niño is expected to continue into the first half of 2027, which adds production uncertainty.
“Meanwhile, Middle East tensions keep fertiliser markets firm and abundant global agri commodity supplies mean disruptions are more likely to trigger short-lived price spikes than a sustained rally,” RaboResearch said.
The United States remains the most exposed major market. Corn margins there are near breakeven on an operating basis, and negative on a full-cost basis. European crop margins could recover from their 2026 trough if yields return to normal.
Brazil keeps comparatively healthy operating margins for soy and corn. Argentina’s soybean margins should improve, though its corn margins remain exposed to higher fertiliser costs and taxation.
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