Drought in New South Wales and Queensland has forced Rabobank to forecast its grain production down for the second year in a row, says Wes Lefroy.
Compounding this problem is an increased amount of cattle on feed, which has pushed the price of grain to "record highs."
Lefroy, who is Rabobank's agriculture analyst, spoke to The Country's Jamie Mackay about the drought, saying it is heavily affecting the grain market, "and the beef market to a lesser extent."
Lefroy says the dry lead-in to the major cropping season in NSW and Queensland has resulted in many farmers deciding to "pull out planned hectares."
"There are actually a lot of crops that were previously planned that didn't go in because of the dry conditions, and with livestock prices being supportive, they've decided to keep pasture and run more livestock as a result."
Also in today's interview: Lefroy looks at rising world fertiliser prices and how they affect Australian and New Zealand cropping farmers.