Emily Dahl, Gaby Coulthard, Tom Killalea, Yilei Ma, Jonathan Wong, Tirza Winarta and Tim Kane
- Value of Australian crop production to fall in 2023–24 from previous year record highs.
- Value and volume of crop exports to fall in 2023–24 but remain well above average.
- Drier seasonal conditions to reduce total Australian winter and summer crop production in 2023–24.
- World prices to ease with rising supply, but will remain elevated.
The value of Australian crop production is forecast to fall by 21% to $46.0 billion in 2023–24, driven by lower production (Figure 1.1). Although lower than the 2022–23 record of $57.9 billion, it is still 29% above the 10-year average and is the third highest value on record. The expected fall in value reflects easing world prices and lower Australian crop production.
The expected fall in production values is driven by grains, oilseeds, and pulses (down 37% to $20.8 billion), other crops (down 3% to $1.9 billion) and industrial crops (down 5% to $6.0 billion). This is offset in part by an expected rise in horticulture (up 5% to $17.3 billion).
Grain, oilseed, and pulse production values are expected to fall from record highs yet remain above average. The onset of El Niño conditions will likely see Australian winter crop production fall in 2023–24, with yields forecast to be below average. As a result, Australian winter crop production is forecast to be slightly below the 10-year average at 46.1 million tonnes (see the Australian Crop Report). Grain, oilseed and pulse prices are expected to ease, reflecting improved global supply, but remain relatively elevated in historical terms:
- Wheat production values are forecast to fall by 40% to $10.0 billion in 2023–24. Despite being a significant fall from last year’s record, this is still well above average and if realised, would be the third highest on record. The expected fall in value reflects easing world prices and lower Australian production.
- Barley production values are forecast to fall by 27% to $3.3 billion, while the gross value of sorghum production is forecast to fall by 45% to $661 million. These declines reflect a broader moderation in international grain prices, along with an expected reduction in barley and sorghum production from high levels in 2022–23.
- Canola production values are forecast to fall by 44% to $3.6 billion in 2023–24, down from record levels in 2022–23 and 2021–22. This reflects an expected fall in canola prices coupled with a decrease in canola production.
Industrial crop production values are forecast to fall in 2023–24 as lower expected cotton production and prices outweigh higher sugar and wine values:
- Cotton production values are forecast to fall by 23% to $2.7 billion in 2023–24, driven by lower production volumes and lower global prices.
- Sugarcane production values are forecast to rise by 19% to $2.4 billion in 2023–24, driven by higher prices. This is despite a forecast slight fall in production.
- Wine grape production values are expected to increase by 12% to $961 million in 2023–24. This is driven by higher production following exceptionally wet weather and disease pressures, which severely reduced 2022–23 production. Drier conditions in 2023–24 will reduce the instance of downy and powdery mildew and support production. However, low prices and subdued demand from wineries for red varieties are expected to weigh on production potential and values.
Horticulture production values are forecast to rise by 5% to a record of $17.3 billion in 2023–24. This largely reflects favourable growing conditions in the Murray-Darling Basin and other irrigated production areas. The value of table grape production is forecast to reach a record value of $1 billion in 2023–24 because of high prices and favourable production conditions.
The value of Australian crop production forecast for 2023–24 has been revised down by 1.2% since the September Agricultural Commodities Report. This is driven by a downward revision in industrial crops (down 7% to $6.0 billion) and horticulture (down 1.8% to $17.3 billion). Lower than expected cotton production and lower fruit and vegetable prices are driving this downward revision.
Figure 1.1 Annual Australian crop production values
The value of Australian crop exports is forecast to fall by 22% in 2023–24 to $39.5 billion, driven by lower production and easing prices (Figure 1.2). This is $10.7 billion lower than the $50.6 billion record value of crop exports in 2022–23, with falls forecast for most crops.
Grain, oilseed and pulse export values are forecast to fall in 2023–24 reflecting both lower export volumes and prices. However, export values are likely to remain above average because of high exportable supply following record crop production in 2022–23.
- Wheat export values are forecast to fall by 43% to $9.6 billion in 2023–24. Although a significant fall from the 2022–23 record value of $16.7 billion, this is still 37% above the 10-year average to 2022–23.
- Canola export values are forecast to fall by 35% to $3.7 billion in 2023–24, reflecting weaker production and export volumes. Despite this fall, the forecast export value remains 58% above the 10-year average.
- Barley export values are forecast to fall by 28% to $2.4 billion in 2023–24 due to lower export volumes and prices. Despite this fall, the value of barley exports is expected to remain 22% above the 10-year average.
- Sorghum export values are forecast to fall by 35% to $945 million in 2023–24 due to lower export volumes and prices.
Industrial crop export values are forecast to rise slightly in 2023–24:
- Cotton export values are forecast to fall by 11% to $4.4 billion in 2023–24 driven by falling global cotton prices and lower export volumes. Export volumes are forecast to fall by less than production as high cotton inventories from previous years support exports.
- Sugar export values are forecast to rise in 2023–24, up by 35% to $3.0 billion. This reflects higher prices, driven by port congestion constraining Brazilian exports, subdued production from other key producers, and ongoing robust global demand.
- Wine export values are expected to decrease by 6% to $1.9 billion in 2023−24 as volumes remain steady, but continued low global prices persist, particularly for bulk red varieties. Subdued demand in major consuming economies, reflecting low disposable incomes and changing consumer preferences, is weighing on export values.
Horticulture export values are forecast to increase by 6% to $3.6 billion in 2023–24, 30% above the 10-year average. A rise in fruit export values (up 27% to $1.8 billion), driven by an increase in grape, orange and mandarin production is expected to more than offset a decrease in tree nut export values (down 17% to $994 million).
Figure 1.2 Annual Australian crop export values
Australian grain and oilseed prices to fall in line with world prices
Australian grain and oilseed prices are forecast to fall in 2023–24, reflecting falling world prices (Figure 1.3). This is driven by rising world grain and oilseed production, particularly for corn and soybeans.
- The Australian wheat export price (Australian Premium White) is forecast to fall by 6% in 2023–24, averaging $490 per tonne.
- Australian coarse grain prices are forecast to fall across most grain types in 2023–24:
- The feed barley price (Geelong feed) is forecast to fall by 4% to an average of $308 per tonne.
- The malting barley price (Geelong malting) is forecast to fall by 2% to an average of $368 per tonne.
- The grain sorghum price (Brisbane sorghum) is forecast to remain relatively unchanged at an average of $418 per tonne.
- The Australian canola price (Melbourne canola) is forecast to fall by 7% in 2023–24, averaging $670 per tonne.
Despite forecast falls, grain and oilseed prices are expected to remain elevated in 2023–24 reflecting strong global demand. Australian export prices for grains are likely to continue trading at a premium to other export origins for the remainder of 2023–24, driven by:
- Lower Australian production available for export and strong competition from domestic millers and feedlots.
- Easing logistical issues along the Australian grains supply chain associated with three consecutive bumper harvests and COVID-19 supply chain pressures.
Figure 1.3 Average weekly Australian wheat, barley, sorghum and canola export prices
Mixed price outlook for industrial crops
- Cotton prices are forecast to ease yet remain elevated in 2023–24 as rising global cotton exports more than offsets weak growth in world demand. The Cotlook 'A' Index (a benchmark of international medium grade raw cotton prices) is forecast to fall by 5% in 2023–24, averaging US96 cents per pound.
- Sugar prices are forecast to increase further in 2023–24 due to continued strong demand and port congestion in Brazil constraining exportable supply. The world indicator price for sugar is forecast to increase by 15% to average US25.1 cents per pound over 2023–24.
- Domestic wine grape prices are forecast to fall in 2023–24, reflecting persistent low red wine grape prices as high Australian supply and subdued demand continue to challenge the industry. White wine grape prices are expected to fall slightly, although the price for Chardonnay is expected to increase. Overall, wine grape prices are forecast to fall by 7% to $602 per tonne in 2023–24.
Horticultural export prices expected to fall
Horticultural export prices are broadly expected to fall in line with slowing global economic growth. Price falls are forecast to be largest for almonds and macadamias due to expected higher global supply. Despite this trend, orange prices are expected to remain steady. Lower production in the United States and the European Union is likely to more than outweigh a bumper season in Egypt, which is expected to support international prices. Table grape prices have also been supported by lower US production following Hurricane Hilary.
Grain and oilseed production to fall from record highs
Australian crop production is forecast to fall in 2023–24 following three consecutive years of record production (Figure 1.4). Total winter crop production is forecast to reach 46.1 million tonnes, slightly below the 10-year average. The national winter crop harvest is progressing earlier and at a much faster pace than recent years, driven by dry finishing conditions. Limited winter and spring rainfall have reduced yield potential in Queensland, northern New South Wales, and northern cropping regions of Western Australia. This is forecast to be more than offset by more favourable seasonal conditions in Victoria, southern New South Wales, and parts of South Australia.
Summer crop prospects are poorer than last season due to low soil moisture levels across summer cropping regions in Queensland and New South Wales during the early planting window. More detailed analysis of 2023–24 crop production can be found in the Australian Crop Report:
- Wheat production is forecast to fall by 37% to 25.5 million tonnes in 2023–24. This is 4% below the 10-year average to 2022–23 of 26.5 million tonnes.
- Canola production is forecast to fall by 33% to 5.5 million tonnes in 2023–24. Production is expected to remain 29% above the 10-year average to 2022–23, reflecting above-average area planted.
- Barley production is forecast to fall by 24% to 10.8 million tonnes in 2023–24. This is 4% below the 10-year average to 2022–23 of 11.2 million tonnes.
- Grain sorghum production is forecast to fall by 45% to 1.5 million tonnes in 2023–24. This is 9% below the 10-year average to 2022–23 of 1.6 million tonnes. Area planted to grain sorghum is forecast to fall by 25% to 517 thousand hectares in 2023–24, reflecting dry seasonal conditions and below-average soil moisture levels in key producing regions during the early planting window.
Figure 1.4 Annual Australian production of major crops
Industrial crop production also expected to decline
Australian cotton production is forecast to fall by 26% to 925 thousand tonnes in 2023–24. Area planted to cotton is forecast to fall by 28% to 413 thousand hectares, driven by reduced dryland and irrigated cotton plantings due to drier conditions under El Niño and a positive Indian Ocean Dipole event. Aggregate cotton yields are expected to increase to 2.2 tonnes per hectare because a higher proportion of Australian cotton is expected to be irrigated. High water storage levels in the Murray-Darling Basin are expected to support irrigated cotton yields despite El Niño conditions. Cotton production is, therefore, likely to remain 20% above the 10-year average to 2022–23.
Australian sugarcane production is forecast to fall by 9% to 30.7 million tonnes in 2023–24 because of lower expected area harvested and drier conditions reducing yields. Production is coming off a peak in 2022–23 supported by La Niña conditions. Despite lower expected production, sugar content in the cane is expected to rise with drier El Niño conditions. Dry spring conditions across major sugar producing regions in Queensland and New South Wales have supported the 2023 sugarcane harvest. This has allowed milling to progress with fewer interruptions compared to last year when ongoing wet conditions caused major delays to the national sugar crush.
Wine grape production for crush is forecast to increase by 21% to 1.6 million tonnes in 2023–24, reflecting higher yields and less expected loss from disease than in 2022–23. Partially offsetting the increase are low price incentives for wine makers to contract the full production potential of wine grapes.
High water availability boosts horticulture production
Horticultural production is broadly expected to increase in 2023–24 because of warmer conditions and high water availability in the Murray-Darling Basin. Table grape production is expected to increase to 275 thousand tonnes, and orange production is expected to increase by 10% to 486 thousand tonnes. Almond production is expected to increase by 37% to 135 thousand tonnes due to the favourable growing conditions.
Grain and oilseed export volumes are forecast to fall in 2023–24 due to the fall in winter and summer crop production:
- Wheat export volumes are forecast to fall by 35% to 20.9 million tonnes in 2023–24. However, record production in 2022–23 will support exportable supply. This is expected to keep export volumes above the 10-year average (to 2022–23) of 18.6 million tonnes.
- Canola export volumes are expected to decrease by 26% to 4.2 million tonnes in 2023–24 from elevated levels in 2022–23 and 2021–22. Lower exports will be driven by lower production resulting from drier seasonal conditions mostly in Western Australia and New South Wales.
- Barley export volumes are expected to fall by 24% to 5.8 million tonnes.
- Sorghum export volumes are expected to fall by 16% to 2.4 million tonnes in 2023–24. This is nonetheless 136% above the 10-year average, supported by strong demand from China.
Cotton export volumes are forecast to fall by 9% to 1.2 million tonnes in 2023–24. However, exports remain elevated at 57% above the 10-year average, supported by demand from emerging Asian markets despite global market uncertainties; demand from Vietnam, Turkey, Bangladesh and Indonesia accounted for more than half of export volumes in 2022–23, and similar export patterns are expected to continue in 2023–24.
Australian sugar export volumes are forecast to increase by 6% to 3.2 million tonnes in 2023–24 with an expected increase in the share of production exported due to high global prices. Strong demand is expected from key export markets including Indonesia, South Korea, Japan and Vietnam.
Wine export volumes are forecast to remain steady at 636 million litres in 2023–24, which is well below the 5-year average to 2022–23.
Horticultural exports on the rise
Horticultural exports are forecast to rise in 2023–24, driven by expected higher production volumes and a favourable exchange rate. However, horticultural export prices are broadly expected to fall in line with slowing global economic growth.
Favourable conditions and record production in some major producing countries have eased global supply tightness for grains and oilseeds, weighing on global prices in 2023–24. For instance, increased corn production in Argentina and the United States is expected to place downward pressure on global grain prices. Similarly, increased industrial crop production will contribute to lower prices, with the exception of sugar prices which are expected to increase as growth in demand is expected to be greater than growth in supply.
World wheat supply falls but remains steady
World wheat production is forecast to fall in 2023–24 but remain above average at 783 million tonnes. The fall is driven by lower production in major exporting countries including Australia, Canada, Kazakhstan and the Russian Federation. These falls in production are expected to more than offset higher production in Argentina, Ukraine and the United States. Wheat production in the European Union is estimated to be similar to 2022–23 production volumes. Despite expected lower production, global wheat prices are expected to fall reflecting strong exports from the Russian Federation and easing global volatility relative to last year.
Improved corn production lifts coarse grain supply
World coarse grain production is forecast to increase in 2023–24 to 1.5 billion tonnes, close to the 2021–22 production record. Higher corn and sorghum production in Argentina and the United States is expected to more than offset lower barley production in key exporting countries such as the Russian Federation, European Union and Australia.
World corn production is expected to increase by 5% in 2023–24 to 1.2 billion tonnes as higher production in the United States and the European Union more than offsets production downgrades in Brazil.
World barley production is forecast to decline by 6% to 141 million tonnes in 2023–24. This is driven by weaker yields across major producing countries such as the European Union, Russian Federation, Ukraine, and Australia more than offsetting higher production in Argentina.
World sorghum production is forecast to increase by 9% to 60 million tonnes in 2023–24. Increased production in the United States and Argentina is expected to offset decreases in Australia due to reduced area planted and El Niño-related dryness during the early planting window.
Soybean production drives increased oilseed supply
World oilseed production is expected to increase by 5% to 659 million tonnes in 2023–24 as higher global soybean production offsets an expected fall in global canola production.
World soybean production is expected to increase by 8% to 400 million tonnes in 2023–24 driven by an increase in production in Argentina and Brazil because of favourable crop conditions. Following prolonged drought in 2022–23, soybean production in Argentina is expected to rebound as El Niño brings a higher likelihood of rainfall and a recovery from drought.
World canola production is expected to decrease by 4% to 85 million tonnes in 2023–24, driven by lower production in Canada and Australia more than offsetting production increases to the European Union and Ukraine.
World cotton production to remain stable
World cotton production in 2023–24 is expected to remain stable. Unfavourable seasonal conditions continue to cause disruptions to major cotton exporting countries such as the United States and India; however, this is being stabilised by production lifts in Pakistan and Brazil, keeping world production levels similar to 2022–23.
World sugar production to increase
World sugar production is expected to increase in 2023–24 reflecting favourable growing conditions in Brazil. Brazil is forecast to increase production, as higher than average rainfall supports harvests in the Central-South regions. This increase is offset somewhat by a weaker outlook and falling production in Thailand and India.
World wine production very subdued
World wine production is expected to approach historic lows in 2023–24, reflecting significant falls in major wine producing regions due to unfavourable climatic conditions. Despite the lowest global production expected in 60 years, falling wine demand globally has weighed heavily on prices. This has been compounded by inflationary pressures which have reduced household disposable incomes and further added to declining sales.
World horticulture production to improve
World supply of horticultural products is expected to improve in 2023–24 driven by higher nut production and plantings, notably almonds in the United States and macadamias in South Africa. The overall increase will be offset by forecast production downturns for table grapes and oranges following Hurricane Hilary in the United States. The United States Department of Agriculture notes that the impacts of the hurricane could lead to the lowest California table grape production in 30 years.
In 2023–24, global demand for grains and oilseeds is expected to increase reflecting higher feed and industrial uptake. The supply of total grains and oilseeds – whilst expected to remain tight – is forecast to increase by more than the increase in demand, moderating global grain and oilseed prices and easing them from historic highs.
World wheat demand reaches new highs
World demand for wheat is forecast to increase to a new record in 2023–24, reflecting an increase in food consumption and feed use. Demand for milling wheat is forecast to increase in line with global population growth and expanding use in Asia and sub-Saharan Africa. World feed demand is expected to rise in 2023–24, supported by higher use of feed wheat stemming from quality downgrades in some key producing countries. This includes China where record rainfall during harvest adversely affected grain quality. Feed wheat demand is expected to be constrained in other regions such as the European Union because of increased use of competitively priced corn.
While growth in consumption is expected to outpace growth in supply – causing global stocks to fall – wheat prices are expected to fall in 2023–24 as global uncertainty surrounding supply continues to ease. However, global uncertainty remains relatively elevated in part reflecting the Russian Federation’s withdrawal from the Black Sea Grain Initiative in July 2023 – for more information see Opportunities and Challenges.
Corn consumption drives world demand for coarse grains
World coarse grain demand is expected to rise in 2023–24 driven by greater demand for corn. World corn consumption is expected to increase to a record 1.2 billion tonnes in 2023–24, behind higher feed and industrial uptake behind softening prices:
- World feed use is set to increase due to ample and competitively priced supply of corn. China's large pig herd and strong consumer demand for meat, will more than compensate for the projected decrease in the cattle and pig herds in the United States.
- Increased industrial use of corn is being driven by an expansion in the US and Brazilian biofuel sectors.
World oilseed demand continues to increase
World oilseed demand is expected to increase modestly in 2023–24. This reflects a continued rise in demand for both canola and soybeans for domestic consumption and industrial use for biodiesel production. Demand for soybeans is expected to remain strong in 2023–24 reflecting elevated Chinese imports as Chinese domestic demand outpaces supply. Nonetheless, growth in global oilseed supply is expected to outpace growth in demand, leading to an overall moderation in global oilseed prices. Additionally, domestic crushing for biodiesel will remain high in 2023–24 and will increase with the expansion of soybean and canola crushing facilities in Canada and the United States.
World biodiesel demand is expected to rise in 2023–24 to service expanding domestic biodiesel mandates and reflecting increased soybean oil production. This is expected to increase domestic crushing and consumption of oilseeds used in biodiesel, reducing oilseeds available for export.
World cotton consumption to rise
World cotton consumption is forecast to increase marginally during 2023–24, in response to lower prices. Global exports are expected to increase following a return to normal milling levels in China, India and Pakistan following disrupted use in 2022–23. Partially offsetting this increase in consumption is relatively subdued consumer demand due to lower disposable incomes in key markets.
World sugar demand steadily increases
World demand for sugar commodities is expected to continue to increase in 2023–24 reflecting rising population and incomes across several emerging markets, particularly India and Pakistan. This increase in demand is expected to be partially constrained by competition from alternative sweeteners.
World demand for wine continues to decline
World demand for wine commodities has been steadily declining since before the COVID-19 pandemic driven by changing preferences for alcoholic beverages, along with increased moderation or abstinence - particularly among younger consumers. COVID-19 saw a spike in demand in some key markets, such as the United Kingdom, and temporary increases in disposable income (due to constrained spending alternatives and higher savings rates). However, this has been eroded by high inflation and interest rates since, which have weighed on disposable incomes globally. While global inflation is expected to ease in 2023–24, it is unlikely to arrest the current trend of declining global demand for wine.
World horticulture demand to decrease
World demand for horticulture commodities is expected to decrease in 2023–24 due to a general slowdown in economic growth. Ongoing high inflation and high interest rates in many advanced economies will weigh on real consumer incomes and spending on discretionary products, including some horticultural products.
Figure 1.5 Expected world supply and consumption for major crops, 2023–24
Removal of Chinese barley tariffs is a positive sign for Australian farmers
Following the removal of tariffs on Australian barley into China in August this year, Australian barley exporters are likely to receive higher export prices due to the premium the Chinese market attracts. Prior to the tariffs, China accounted for over 85% of all Australian malting barley exports, which attracts a price premium relative to Australian feed barley alternatives. Malting barley exports for the September month 2023 have increased sixfold year on year, prompted by China's return. Market consensus suggests that exports could increase even further over the remainder of 2023 given the current strength of Chinese purchases.
Black Sea remains a source of uncertainty
The Black Sea Grain Initiative – established following the Russian Federation's invasion of Ukraine – has facilitated ongoing Ukrainian grain exports out of the Black Sea. The Russian Federation's withdrawal from the Initiative in July 2023 has added to uncertainty surrounding Black Sea exports; this is likely to continue adding volatility to world grain markets in 2023–24, keeping international prices relatively elevated.
Biodiesel policies support global demand for oilseeds
The expansion of domestic biodiesel mandates in the United States and the European Union provides an opportunity for Australian producers and exporters because of lower expected North American exportable supply. As the US biofuel market continues expanding and Canada increases crushing facilities, more oilseeds will be used domestically in the North American market. This is expected to reduce their exportable surplus, providing an opportunity for Australian canola exports.
Cotton faces competition from synthetic fibres
Synthetic fibres are a substitute for cotton as they are a cheaper alternative and have quick-drying and deodorising features. Growing preference for synthetic fabrics has started to weigh on global cotton demand in recent years, representing a challenge for Australian cotton producers. Nonetheless, Australia is likely to continue to be competitive in global markets as one of the most water efficient producers.
Transitioning to management of varroa mite
On 19 September 2023, the National Management Group – the peak decision-making body for the national varroa mite emergency response – decided that eradication of varroa mite from Australia was no longer considered to be achievable and the response focus would transition from eradication to management.
The aim of the transition to management program is to increase resilience and capacity to manage varroa mite within the Australian honey bee industry and thereby minimise the ongoing impacts of varroa mite naturalisation on the honey bee industry and pollination reliant industries. This will occur through slowing the spread of varroa mite, building industry resilience, providing management options, and supporting pollination security. As part of transition to management activities, New South Wales is now operating under suppression or management zones to slow the spread of varroa mite, with movement of bees within NSW permitted with a declaration.
A benefit-cost framework for responding to varroa highlights that a large proportion of the economic losses of crop producers and consumers associated with a varroa mite outbreak would likely be in the form of payments to pollination services industries. Varroa mite will impact wild European honey bee populations which will present a challenge for producers that rely on them for pollination. These producers are likely to increase their use of pollination services. This is likely to have a small impact in 2023–24 and increase in future years as varroa mite spreads.