Australian farmers under pressure from the oil crisis, high fertiliser costs and soaring inflation will be forced to pass on costs to consumers, pushing up food prices.<\/p>\n
This warning came from ANZ commodity strategists Soni Kumari and Daniel Hynes, who stress that oil shortages from the Iran war will fuel inflation elsewhere in the economy.<\/p>\n
They warn that price hikes from the conflict will likely be delayed as higher fertiliser and fuel costs \u2013 notably for diesel \u2013 rattle the agriculture sector.<\/p>\n
Fertiliser prices are up 30 per cent in the United States and have lifted further in other markets, according to Ms Kumari and Mr Hynes\u2019 note.<\/p>\n
\u201cAustralia imports around 85 per cent of its fertiliser needs, leaving it highly exposed to ongoing trade disruptions,\u201d the note read.<\/p>\n
\u201cMore than 60 per cent of the urea used in Australia\u2019s fertilisers comes from the Middle East, with the balance from Asia.\u201d<\/p>\n
ANZ warned that Australians should expect smaller crops and a rise in food inflation due to the crisis.<\/p>\n
Fertiliser prices are just under 20 per cent below the peak reached in early 2022 when the invasion of Ukraine rattled food markets.<\/p>\n
Risks to the food market remain as the Middle East conflict disrupts a wider array of the world\u2019s energy and fertiliser supplies than the Russia-Ukraine conflict did, ANZ warned.<\/p>\n
However, this impact would not immediately hit prices in the same way the beginning of the Russia-Ukraine conflict did.<\/p>\n
\u201cUnlike the Russia-Ukraine conflict, the current conflict in the Middle East has not shown any immediate effect on agricultural production,\u201d the note said.<\/p>\n
\u201cThis is because Russia and Ukraine were major grain producers but the Middle East is not a major producer.<\/p>\n
\u201cIn the near term, fertiliser demand is being supported by existing inventories and government subsidies, while the effects of lower application rates typically emerge only in next year\u2019s harvest.\u201d<\/p>\n
A similar warning came from Rabobank\u2019s 2026\/27 Australian Winter Crop Forecast that predicted an eight per cent drop of Australia\u2019s winter cropping area.<\/p>\n
Wheat planting will fall more than 20 per cent, however, barley, canola and pulse plantings are expected to lift compared to last year\u2019s crops.<\/p>\n
RaboResearch senior grains and oilseeds analyst Vitor Pistoia said higher fertiliser and diesel prices will influence farmers\u2019 cropping decisions and food output.<\/p>\n
\u201cThese higher costs are encouraging shifts towards lower-input crops and contributing to a reduction in total cropping area,\u201d Mr Pistoia said.<\/p>\n
Food prices are also expected to rise as inflation remains elevated at 4.6 per cent.<\/p>\n
Fresh data from the Australian Bureau of Statistics due on Wednesday will confirm how the oil crisis continues to send prices soaring.<\/p>\n
It will also reveal where in the economy the higher fuel costs have spread.<\/p>\n","protected":false},"excerpt":{"rendered":"Australian farmers under pressure from the oil crisis, high fertiliser costs and soaring inflation will be forced to…\n","protected":false},"author":2,"featured_media":696662,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[5629,64,63,99,20024,164,263493,41728,98767,267069,1055],"class_list":["post-696661","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-anz","tag-au","tag-australia","tag-business","tag-commodities","tag-economy","tag-fertiliser","tag-food-prices","tag-fuel-crisis","tag-oil-crisis","tag-united-states"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/696661","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=696661"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/696661\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/696662"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=696661"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=696661"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=696661"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}