Dennis Voznesenski
Agricultural Economist
Australia’s wheat sector is entering 2026/27 with strong yield momentum, driven by farm consolidation, improved machinery, precision and autonomous spraying, and seed advances that better suit drier conditions. However, rising input costs, especially nitrogen fertilizer, are tightening production decisions, potentially weighing on protein levels and reshaping post-harvest selling dynamics as expanded on-farm storage gives growers greater marketing leverage.
Australian crop yields are expected to continue improving in 2026 assuming favourable seasonable conditions. Yield gains are being driven by improvements in cropping machinery, seed technology and farm consolidation.
Australian farms are becoming larger, and the number of individual farmers fewer. Larger farm sizes are allowing farmers to purchase more expensive and more efficient equipment, spreading the cost over more hectares. The uptake of precision spraying increased considerably in recent years, improving agrochemical and fertiliser application efficiency.
Furthermore, there has been a visible increase in the use of autonomous spraying machinery in 2025, helping reduce labour costs and boost productivity. According to Australian agricultural statistical agency ABARES, the average cropping farm size increased from 1,731 hectares in the year 2000, to 3,787 hectares in 2025. In 2023, 18,000 farms were classified as being involved in cropping, which compares to 39,916 in the year 2000 according to the ABS. New seed varieties have meant that crops are handling Australia’s drier conditions better. The most recent 5-year average national wheat yield was recorded 40% above one decade earlier.
An 11% rise versus the year prior in nitrogen fertiliser proteprices could lead to reduced nitrogen use and lower protein content in the coming season. The rise in fertiliser cost dims the benefit from a rise in the premium received for higher protein wheat. The premium of high protein wheat (H1 – 13.5% protein) to Australian Prime Wheat (APW1 – 10.5%) rose from A$6/mt in January 2025 to A$15/mt in January 2026.
The increase in on-farm storage capacity in recent years will allow farmers to hold back sales when wheat prices are low in coming years. More selling leverage by farmers could increase sourcing difficulties post-harvest, especially if conditions become drier in 2026. The Australian Bureau of Meteorology is forecasting a slightly above 50% chance of exceeding median rainfall on the east coast prior to April planting, and below 50% in Western Australia. While no official government data has been collected regarding on-farm storage since 2010, travel through the farming regions has shown tripling on-farm storage capacity in some areas over the past 5-10 years.
The recent rise in on-farm storage construction stems from two major drivers. First, a tax incentive for business investment during COVID. Second, weak domestic wheat prices between 2020 and 2022 compared to global levels. A multi-year run of record crops led to an overwhelmed logistical and storage supply chain, leaving Australian crop prices considerably below global levels. The rise in on-farm storage reduces the urgency of farmers to sell at harvest or during low price environments more broadly. The rise in on-farm storage will continue making it difficult to assess the exportable surplus of wheat remaining.
With the recent decline of canola prices, the ratio of the price of a tonne of Australian Prime wheat to the price of a tonne of canola sits at 48%, a bounce back from a multi-year low of 43% in December 2025, and roughly at a similar level to last year. Given a similar price relationship to last year, there is unlikely to be significant deviations in wheat area planted this year. Planting will begin in April and decisions regarding seed varieties and fertiliser and agrochemical purchases are already being actioned for the 2026/27 season.