Australia cut its forecast for 2014/15 wheat exports and increased its beef export forecast as dry weather hits crops and drives up slaughter rates, taking the national herd to at least a 17-year low.
The forecasts come as Australia's weather bureau warned last week that an El Nino weather event - linked to hot, dry weather - is likely over the next three months, darkening the outlook for agricultural producers..
Australian wheat exports were pegged at 16.99 million tonnes, down 6 percent from a September forecast, the country's official commodities forecaster said. The move followed a cut in its wheat output forecast earlier this month.
Beef exports by the world's third-largest exporter were seen at 1.18 million tonnes in the 2014/15 season, up 4 percent from a September estimate, the Australian Bureau of Agriculture, Resource Economics and Rural Sciences (ABARES) said.
The bureau warned this number could be exceeded without a break in the dry weather.
"Australia's cattle industry is mostly pasture based and unfavorable seasonal conditions would result in a further weakening in carrying capacity, leading producers to continue liquidating their herds," ABARES said.
With many parts of Queensland state experiencing below average rainfall over the past two years, the country's national herd will fall to at least a 17-year low of 26.4 million head of cattle, it said.
ABARES' data only extends back to 1998, but industry body Meat and Livestock Australia estimates the national herd will fall to a two-decade low at the end of the 2014/15 season.
Analysts said the longer the drought continues to drive up slaughter rates, the bigger a likely contraction in beef exports should rains arrive and allow farmers to rebuild stock numbers.
But in the short-term future, the country's largest meat processors, most of which are private companies, will continue to reap healthy financial margins.
With slaughter rates soaring, domestic prices slumped to a three-year low earlier in the year. However, amid strong demand for beef, export prices have remained strong, earning many of the country's largest meat processors healthy margins.
Australian sugar production during the 2014/15 season was estimated at 4.6 million tonnes, unchanged from the September estimate, ABARES said.
Australian milk production was seen at 9.375 million litres, ABARES said, up from its September estimate of 9.29 million litres.
The increased forecast will dispel concerns over potential production problems as large milk processors such as Murray Goulburn, Bega Cheese Ltd and Warrnambool Cheese and Butter pursue expansion plans.