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The commodity environment is central to understanding why so few vendors are coming to market. Queensland's cattle producers entered 2026 with the National Young Cattle Indicator sitting close to 30 per cent above year-ago levels and tracking at the 9th decile of its 10-year range. When a grazing enterprise is generating returns at that level, the case for selling the land underpinning it is difficult to make. The same logic applies across Victoria and South Australia, where sheep and wool producers are watching the National Trade Lamb Indicator at the 10th decile and the wool market's Eastern Market Indicator at its highest point since March 2019. Across both livestock sectors, strong returns are translating directly into vendor confidence and the supply restraint that confidence produces.
Input cost pressures represent the more complicated dimension of the current environment. The June 2026 ABARES Agricultural Commodities Report documents the challenge in detail. The Middle East conflict and closure of the Strait of Hormuz has driven domestic diesel prices more than 30 per cent above pre-conflict levels, with urea up more than 80 per cent. ABARES forecasts average broadacre farm business profit to fall 70 per cent in 2026/27 to around $65,000 per farm, with cropping operations facing the steepest decline, from $810,000 to $280,000. Beef farms are forecast to average $11,000 for the year. The ABARES state-level forecasts reveal significant divergence: New South Wales farm businesses are forecast to average a loss of $16,000 in 2026/27 against a $161,000 profit the prior year, while Western Australian farms are forecast to average $151,000 despite a substantial step down from $515,000 in 2025/26.
Those profit forecasts matter for the land market. Compressed margins have historically discouraged rather than encouraged selling, reinforcing the supply constraints already evident in the transaction data. A landholder facing a difficult operating year has less reason to accept whatever the market offers, not more.
Where the picture is genuinely more complex is across northern New South Wales and southern Queensland, where below-average soil moisture and some of the lowest autumn rainfall on record in parts of both states are expected to see some growers scale back their cropping programs this season rather than plant into high input costs and uncertain conditions. ABARES forecasts national winter crop production to fall 21 per cent, with wheat area down 26 per cent. The consequence, however, is a tighter domestic grain market. Record feedlot utilisation across New South Wales and Queensland is already supporting local demand, and the wheat-barley price spread is at its narrowest point since 2019, which provides its own form of support for cropping land values over the medium term.
The structural conditions underpinning Australian farmland values remain intact. Vendor confidence is high, supply is tight, and the commodity markets that drive landholder decision-making are, with some regional exceptions, working in vendors' favour. How the market moves through the second half of 2026 will depend on seasonal outcomes and the durability of current livestock prices, but the foundations supporting values through this cycle show no sign of giving way.