In its latest Australian crop update, agribusiness banking specialist Rabobank says the adverse weather conditions have slashed around two million tonnes off earlier season forecasts, with the 2015-16 Australian wheat crop expected to come in at 23.3 million tonnes.

Rabobank grains and oil seeds analyst Ben Larkin said despite the dry start to spring and hot weather conditions – with the warmest October on record across much of the country – a slightly above-average result was still expected, with the national wheat crop only pegged to be 650,000 tonnes smaller than last season.

“Largely underpinning this result is Western Australia, with the west expecting to bin a nine million tonne wheat crop, while an above-average result is also anticipated in NSW and South Australia,” he said.

“Victoria has been the hardest hit, with much of the wheat crop in the western regions cut for hay, while the prevailing dry in Queensland has been offset somewhat by a reasonable season in the areas west of Dalby.”

Mr Larkin said the national barley crop is also expected to come in at above-average levels, while canola is forecast to drop by 12 per cent on 2014-15.

“This season we saw an increase in barley plantings at the expense of canola, with an 8.25 million tonne barley crop expected,” he said.

“But we are seeing a greater incidence of feed barley on the back of hot weather and then late season rainfall, with reports of higher screening and protein levels.”

The Australian canola crop is forecast to reach 3.06 million tonnes, Mr Larkin said, with production in Victoria down by 33 per cent.

The crop update says the Australian dollar is expected to weaken over the coming year, with the dollar expected to trade at US66 cents by the end of 2016.