Rabobank says New Zealand’s agribusiness sector had performed strongly in 2025 but that it would need to be quick on its feet to maintain that momentum this year.

In its latest Agribusiness Outlook, Rabobank said the sector needed to remain alert to the wider forces shaping its operating environment.

The bank said the global “chessboard” had shifted again in 2025.

“This wasn’t through one dramatic move, but rather through a steady tightening of trade blocs, industrial policies and geopolitical manoeuvring that reset the rules of play,” Rabobank senior agricultural analyst Emma Higgins said in the report.

“As we enter 2026, the pieces are still moving, and the pace hasn’t slowed.

“Major economies are making assertive ‘opening moves’ on trade, technology and security, turning commerce into a tool of leverage more than co-operation,” she said.

Higgins said that for New Zealand, “this isn’t distant noise”.

“It is the environment in which our farmers, processors and exporters must operate – in addition to usual supply and demand fundamentals.

“Chess rewards players who think three moves ahead,” she said.

“For New Zealand agribusiness in 2026, this could mean focusing on the wider forces shaping the board – not just day-to-day price movements.

“With the right positioning, New Zealand farmers and exporters can turn a shifting board into tomorrow’s opportunity.”

The report says political developments – both locally and internationally – shape as a key driver of New Zealand agriculture’s fortunes in the coming 12 months.

New Zealand’s election, due on November 7, would likely see land, water and climate as key campaign topics.

Rabobank senior analyst Emma Higgins. Photo / Supplied

Offshore, the US heads into a high-stakes political cycle of its own, with policy signalling, tariff talk and bureaucratic muscle likely to keep markets on edge.

“The specifics will shift but the tempo is set, and volatility is part of the rhythm.”

With the Reserve Bank’s easing cycle largely complete, Higgins said interest rate cuts were expected to pause, with a possible firming later in the year.

“This offers short-term breathing room on debt servicing, but also keeps currency movements front-of-mind.”

The NZD/USD exchange rate is expected to swing between the high-US50cs and low-US60c, meaning export receipts may move as much with offshore politics as with economic data.

“Looking further ahead, the future role of the US dollar is worth watching.”

This is particularly the case, Higgins said, given “we are now seeing China settling more commodity purchases in renminbi”.

“Cryptocurrency stablecoins are also now creeping into international commodity trade,” she said.

“And while exporters need not react yet, they do need to stay aware.”

The report says climate is a further factor holding significant influence over the sector’s fate.

“Climate remains the strongest piece on the board, shaping every part of New Zealand’s food and fibre sector,” Higgins said.

The report said energy markets had reset lower through late 2025, with Brent crude oil sliding into the high US$50s a barrel and offering relief for freight and fuel budgets.

Higgins said on-farm efficiency upgrades, diversified freight paths and disciplined cost management remained essential.

Fertiliser affordability will likely remain challenging this year, the report said.

Urea was highly volatile through 2025 and hopes of early-2026 stability have faded.

Geopolitical risks remained the biggest driver, with unrest in Iran posing a direct risk given its 10% share of global urea exports, Higgins said.

“Any escalation in tensions could push prices higher, and markets can move quickly.

“Strong early-season buying in the US, alongside sustained Indian demand, is likely to keep wholesale prices supported before easing later in the year.”

Grains and oilseeds remain subdued because of large global corn stocks and expanded South American plantings.

“Lower feed costs may help intensive competitors, but they also highlight the natural cost advantage of New Zealand’s pasture-based systems.”

2026 Outlook:

Dairy: Rabobank said it would be another record for milk production at a time when milk flows are voluminous elsewhere.

“Critical to farmer fortunes will be the strength of demand in the face of abundant milk supply,” the bank said.

Beef: Strong United States demand continued to underpin New Zealand beef pricing in 2026, with firm farmgate values supported by elevated US import prices and only modest supply growth.

China’s new quota settings remained a key watch point.

Sheep: Sheepmeat enters 2026 with firm pricing supported by tight global supply, steady demand and improved market diversification, the bank said.

Jamie Gray is an Auckland-based journalist, covering the financial markets, the primary sector and energy. He joined the Herald in 2011.