Stronger El Niño threatens Australia’s 2027 crop and shifts planting decisions

Australian farmers are preparing for a drier season as El Niño strengthens. According to Commonwealth Bank estimates, the climate event could cost the economy around $13.4 billion over two years and leave GDP about 0.45 percentage points below its potential level.

The 2026 harvest still looks relatively strong. Australia’s agricultural economics agency forecasts around 61 mln tons of grains and other field crops, which could make it the fourth-best season on record. However, the main risks are now shifting to 2027.

If El Niño strengthens through summer and spring and soil moisture reserves decline, next season’s production could be hit much harder. Farmers are already reducing planted area and shifting toward less water-intensive crops, mainly wheat and barley, instead of higher-margin canola and chickpeas.

Drier conditions are also putting pressure on the livestock sector. Some producers are reducing herd sizes and increasing slaughter to lower feed requirements, although strong export demand, particularly from the United States, continues to support beef prices.

Analysts estimate that a production shortfall similar to the 2002/03 drought could add around 0.25 percentage points to inflation. This would add further pressure on the agricultural sector, which is already facing high fuel and fertilizer costs, expensive credit and labor shortages.

Tags: Australia, barley, wheat, winter crop, Эль-Ниньо