Several analysts have offered opinions on just how a protracted war in Iran will affect farm income in season 2026-27 following the record result from season 2025-26
History books is where future generationswill read how the USA attack on Iran affected oil prices and trade worldwide in 2026, and whether it was the catalyst to launch WWIII.
But for us all in the meantime, we will need to navigate from a record farmgate income in season 2025-26 estimated at near $100 billion to lay the groundwork for the prospects of a good follow-up 2026-27 winter season and continue to concentrate on everyday pursuits.
While at first the build-up of US forces in the Gulf appeared to run along a plotline of a B-grade movie. That all changed on 28 February 2026 when a joint bombing attack by US-Israel killed the then Iranian leader Ali Hosseini Khamenei, the second person to hold the position of Ayatollah since the revised regime came to power in 1979.
The premature assumption of a clear victory was dashed when the son of the deceased Ayatollah was named as the new Supreme Leader. With Mojtaba Khamenei taking up the role with a defiant tone, the situation is very dangerous and has all world powers on watch.
And just how a war footing in Tehran can affect other countries has become evident with fuel pump shortages worldwide with the price of diesel already escalated by 60% in our own local market. And set to rise much steeper over the next few months if the insurgence by US-and-Israel forces continues.
Just how the oil price rise will affect farmgate income has been estimated by Bendigo Bank in a summary of the likely outcome in different farm sectors.
Bendigo Bank Agribusiness suggests the conflict in the Middle East is set to have wide ramifications for some farm segments, despite expectations of a strong seasonal outcome.
The senior manager of industry insights, Eliza Redfern relates to plentiful recent rain but indicates the impacts of the Middle East conflict are a growing concern for some local producers.
“The early autumn rain has delivered a much-needed boost for many, but farmers are simultaneously facing a new wave of uncertainty due to geopolitical instability. Any sustained supply chain disruption will be felt on-farm, including much higher fertiliser and fuel bills,” Eliza Redfern added.
Those worst affected
Sheep: With sheep sitting at record prices this sector could have the most to lose from the geopolitical storm clouds engulfing markets worldwide.
Our sheep and lamb prices remain near record highs, fuelled by tight domestic supply and recent rain is encouraging producers to retain stock to rebuild flocks, pushing the National Restocker Lamb Indicator toward a record peak.
However, as the Middle East accounts for almost a fifth of our lamb and nearly a third of our mutton exports, the industry faces significant geopolitical headwinds, with a potential tariff hike in the major US market adding another layer of risk.
Cropping: Rain boosts planting, but input costs that seemed to have been subdued early in the season have begun to bite with apparent shortages arising.
A global wheat price rally has been slow to translate into improved local prices, and while barley exports are setting records it is due to huge demand from China, who rely on Iranian oil.
Recent rainfall has provided an ideal start for the 2026 winter cropping season, but enthusiasm is being tempered by a sharp increase in urea prices and potential availability issues linked to the global trade disruptions.
Segments less affected
Cattle: Prices have risen following favourable rainfall and renewed demand from several supply markets.
Cattle prices rose further in February, due to robust processor demand and renewed restocked activity resulting mainly from favourable February rainfall in some cattle producing regions.
While potential safeguard tariffs in key Asian markets remain a watchpoint, international demand remains exceptionally strong, and is expected to continue, particularly in the US, where herds are at a multi-decade low.
Horticulture: This is a sector that has boomed across the past few seasons, but downpour delays to the harvest has raises quality concerns.
Some growers face potential downgrades due to heavy rainfall in South Australia and Victoria that has delayed harvest and raised quality and disease risk concerns for almonds and table grapes.
All fruit and nut exporters are also watching nervously as container freight rates climb due to shipping disruptions.
But overall, horticulture growers have created strong growth from new supply markets.
Wool: Tight supply continues to push prices higher and give wool cockies the best run they have seen for several years.
Wool prices have continued their upward trend, supported by strong demand from Chinese mills and a tightening of local supply.
With national wool testing volumes tracking well below last year, this sustained reduction in supply is expected to keep upward pressure on prices, outweighing any drag from a stronger Aussie dollar.
Dairy: Rain welcomed, and will keep production at high levels, but producers have to content margin squeeze.
While dairy markets have been buoyed by solid February rainfall, and the upwards trajectory of global dairy prices, they are grappling with far too much product at a time when conflict is disrupting supply chains.
