The volume decline is due to a mix of indicators, but livestock markets sit near the top of the list. Cattle producers across eastern Australia entered 2026 with the National Young Cattle Indicator sitting close to 30 per cent above year-ago levels, and the Eastern Young Cattle Indicator tracking at the 9th decile of its 10-year range. When a grazing property is generating returns at that level, the incentive to sell the land underpinning it weakens considerably. The same dynamic applies in sheep country, where the National Trade Lamb Indicator has been sitting at the 10th decile and the wool market's Eastern Market Indicator recently reached its highest point since March 2019. Producers running sheep and wool enterprises are watching prices that, even accounting for input cost pressures, make voluntary sale an unattractive proposition.
That input cost pressure is real and the June 2026 ABARES Agricultural Commodities Report frames its scale clearly. The conflict in the Middle East and the closure of the Strait of Hormuz has driven domestic diesel prices more than 30 per cent above pre-conflict levels, while urea prices surged more than 80 per cent. Fertiliser and fuel make up close to a third of total variable costs for crop farmers and ABARES forecasts that average broadacre farm business profit will fall 70 per cent in 2026/27 to around $65,000 per farm. Cropping operations bear the heaviest load, with average profit forecast to drop from $810,000 to $280,000, while beef farms are forecast to average $11,000 for the year. Significantly, compressed margins tend to discourage vendors from selling at precisely the moment buyers might anticipate price softening, reinforcing the supply constraints already evident in the transaction data.
Some growers, particularly across northern New South Wales and southern Queensland where soil moisture profiles remain below average heading into winter, are expected to leave area fallow this season rather than absorb the cost of planting into uncertain conditions. ABARES forecasts national winter crop production to fall 21 per cent, with wheat area down 26 per cent. For those growers, preserving cash in a year of tight margins is a considered response to a difficult operating environment. It is also one that supports a firmer domestic grain market, with record feedlot utilisation rates across NSW and Queensland already supporting local demand and the wheat-barley price spread at its tightest point since 2019.
For cropping land values the question is what reduced planting intentions mean for buyer sentiment over the medium term. Farm profitability and land values are connected, but the relationship operates with a lag. A single difficult season does not necessarily translate into softer prices, particularly where supply remains as tight as it currently is. The 2026 Federal Budget's $1.1 billion Cleaner Fuels Program creates a longer-run structural demand signal for canola producers that adds another layer of support for cropping land in Western Australia and South Australia specifically. The temporary fuel excise cut that assisted diesel prices through the March quarter has now been extended, though the impact to farmers is partially buffered by the Fuel Tax Credits Scheme.
The ABARES state-level profit forecasts also reveal why vendor behaviour differs so markedly across the country right now. NSW farm businesses are forecast to average a loss of $16,000 in 2026/27, shifting from a $161,000 profit the prior year. Western Australian farms, by contrast, are forecast to average $151,000 despite a significant step down from the $515,000 of 2025/26. Vendors in those two states are operating from very different positions, and that is showing up in both the volume and price data.
The farm property market is well supported heading into the second half of 2026. Prices are holding and in most states still rising, underpinned by vendor confidence and a supply environment that remains among the tightest on record. The extent to which that holds through the remainder of the year will depend on whether the late-May rainfall across the eastern states converts into a meaningful cropping season, and whether livestock markets sustain their current levels. Both are live questions, but the structural conditions that have supported values through multiple cycles remain firmly in place.