Rabobank has declared October's rain too little, too late for some commodities, and believes ongoing hot, dry conditions are more than likely to wilt others.
The Australian dairy forecast, cropping outlook, and the supply of young cattle and lambs are sagging in the face of a drier-than-average three-month forecast, with the wool market also unable to find a floor in the current market correction, as buying remains restrained.
Rabobank's monthly report says, while mid-spring rainfall might have filled up gauges across drought-ravaged swathes of NSW and Queensland, it has not improved summer harvest prospects, with this year's grain volumes expected to drop 23 per cent from last year to 29 million tonnes.
"As the harvest gets going, or doesn't as is the case in many regions, all eyes are on just how low production will be in the most dry areas of Qld, NSW, Vic and also SA," Rabobank said in its report on Thursday.
"Very low new crop supply will keep Australian grain prices in their elevated range well into 2019... (as well as) the prospect of lower livestock feed grain demand and higher winter grain crop production."
October saw areas surrounding Dubbo, Moree, Dalby and Emerald, exceed rainfall totals for the previous six months combined, but warming waters in the Pacific have increased the likelihood of an El Nino and hot, dry weather into the new year.
Elsewhere, Rabobank said Dairy Australia's updated forecast for milk production also makes for bleak viewing.
It says a worst case scenario is for national milk production to fall by as much as seven per cent this season to 8.6 billion litres.
"If this sizeable fall eventuates, it would bring the national milk pool to a two-decade low and lead to extensive pressure across local supply chains," Rabobank said.
Limited supplies of heavy, finished cattle are expected to keep prices firm, while prices for cows and younger cattle will be heavily dictated by the season, and potentially the onset of the January southern weaner sales.
Lamb prices have bumped into the new season with supply and rainfall causing volatility.
While there have been some storms in cotton regions that have provided some moisture for planting, total production is set to be around 50 per cent of last season's 4.6 million bale crop.
