In what ABARES describes as a "remarkable combination of events", record yields, prices and good seasons have combined for the record ag production forecast of $73 billion for 2021-22.

It's an unprecedented upward revision in a single quarter for nearly 20 years, with an additional $8b added to the gross value after release of forecasts in June.

Leading the way is the value of crop production, forecast to increase by seven per cent to a record $39.5b because of strong price increases for grains, cotton and sugar.

ABARES says the value of livestock production is forecast to increase by 8pc to $33.5b, driven by higher volumes and hunger for young cattle.

"The sector stands poised to capitalise on a remarkable combination of events. Both seasonal conditions and prices are forecast to be much better than earlier expected," the report said.

"In Australia, the continuation of widespread favourable seasonal conditions means another near record harvest is forecast. This has also contributed to continued optimism in the red meat industry, leading to record prices being paid for young cattle by both restocking graziers and processors. Overseas, key competitors are suffering poor growing seasons, which is pushing up international grain prices.

"Further, the ongoing recovery from the depths of the global COVID-19 recession is leading to a resurgence in demand for travel and in discretionary spending. This is increasing demand for fibres, oilseeds and sugar."

But ABARES warned the good conditions may not persist as agricultural production was likely to fall after 2021-22 and "elevated crop prices are unlikely to persist if seasonal conditions improve overseas".

ABARES executive director Dr Jared Greenville said if the forecast in the Agricultural Commodities: September Quarter report proved accurate, then it would be the first time the agriculture sector has been valued at more than $70 billion.

"The forecast for next year is due to a combination of factors, all tumbling neatly into place," Dr Greenville said.

"While there are risks related to mice, labour availability and continued uncertainties due to COVID-19, we are expecting national production to remain robust.

"We've had a solid cropping year across the wheat-sheep belt, so we're looking at another robust harvest.

"A good year means optimism at the saleyards, and many of our farmers are enjoying their second good year in a row. This has translated to record prices for young cattle as farmers look to restock.

"The last two years have placed our farmers in a good position to take on any challenges ahead."

Federal Agriculture Minister David Littleproud said "this is remarkable in unprecedented economic times, and plenty of industries in Australia haven't seen that kind of growth".

"We've got all our ducks in a row for a record year again underpinned by our Ag 2030 plan to help agriculture trash its $100 billion goal by 2030.

"It's not all smooth sailing. COVID-19 continues to provide challenges for international trade, although we are working as a government to do what we gain to boost international trade.

"We have listened to concerns about labour shortages and we are progressing the agricultural visa to make sure that we can get the fruit picked and the veggies out of the ground.

"We are also keeping an eye on mouse numbers through the spring, particularly in southern Queensland and northern and central NSW.

"While mouse numbers are unlikely to impact the harvest, they may affect grain stored on-site. Bulk handlers are already upping their storage make sure that we can get as much crop to the market at possible.

"Australians backed our farmers during the tough years of drought we are now seeing those very farmers help the Australian community and Australian economy through and beyond the pandemic."

The value of agricultural exports is also forecast to be a record, increasing by 12pc to $54.7b in 2021-22. Growth is forecast for most of Australia's major export commodities.

One of the biggest agricultural sectors to take a hit in prices though was wine, with prices down 13pc, obviously due to the high tariffs imposed by China, and also live cattle prices down 8pc. Wine though was recovering from the tariff hit, and grape prices were increasing.

For every other sector it was up and up with a massive 38pc price rise forecast for cotton in 2021-22. ABARES said there will be increased demand for natural fibres as the world came out of the pandemic and cotton and wool were high on consumer lists.

"The easing of COVID-19 restrictions, strong global economic growth and higher oil prices are expected to drive demand for natural fibres in 2021-22. The reopening of major economies will increase consumer spending on apparel, as people draw down on the savings accrued during the pandemic," the report said.

WOOL

The ABARES report indicated a golden fleece time for Australian woolgrowers. "The Eastern Market Indicator (EMI) for wool is forecast to average 1,390 cents a kilogram clean for 2021-22, up by 16pc from 2020-21. Government stimulus packages in major advanced economies have encouraged consumer spending. Wool auction and export data show strong demand for fine and superfine wool in the first half of 2021, in preparation for the northern hemisphere winter.

"There are indications that wool stocks have been drawn down, following a build-up during 2020 due to COVID-induced disruptions and uncertainty.

"Australian auctions cleared over 860,000 bales in the first half of the year, up by 52pc on the same period in 2020 and 9pc on the same period in 2019. Much of the auctioned wool was likely classed as fine and superfine - 88pc of Australian wool exports were below 24 microns in the first six months of 2021."

The national flock is also rebuilding after the good seasons and pasture growth, with ABARES predicting the Australian sheep flock will reach 68.2 million head by the end of 2021-22.

BEEF

Cattle prices will remain strong but there may be pressure next year with more cattle entering the market.

"Average saleyard prices in 2021-22 are forecast to rise by 12pc to 702c/kg. Favourable weather conditions are expected to give farmers the confidence to continue herd rebuilding in 2021-22. Young cattle prices have pushed heavier cattle prices upwards. The momentum of price rises to August 2021 will keep prices high for the rest of 2021.

However, buyers are unlikely to sustain current historically high purchase prices for the remainder of 2021-22. Rebuilding means that more cattle are likely to be available to markets in 2022, easing supply pressure on prices. Beef export prices are expected to rise slightly but less than saleyard prices. This will place additional pressure on processors. Demand in key export markets is expected to stay strong, and tight supply will keep export prices slightly higher."

GRAINS and OILSEEDS

Key points for wheat were:

Australian barley is doing well and finding new export markets after the imposition of heavy tariffs by China.

"The world indicator price for barley (fob Rouen, France) is forecast to increase by 6pc to US$253/t in 2021-22. World demand for barley is expected to outpace supply, leading to lower stocks and higher prices," ABARES said.

Canola was looking very strong in the short-term. "Reduced Canadian canola production to tighten global supply, driving up Australian export price.

"Forecast record Australian canola production underpinned by 24pc higher area planted and above average expected yields. Australian canola export value to increase 31pc to $3.3b in 2021-22, reaching record levels."

SHIPPING PREDICAMENT

ABARES noted the difficult international supply chain with delays to exports due to shipping congestion and large hikes in container costs, an issue highlighted by The Land recently.

"Over the first half of 2021, constraints on global shipping capacity have pushed up shipping costs significantly. One aspect of the crisis is a shortage of shipping containers. The Freightos Baltic Global Container Index rose from $3,452 on January 1, 2021, to $10,519 on September 3. The impact from shipping costs is being felt across all commodities, whether shipped by container or in bulk, increasing transaction costs and dampening global economic activity. Cotton exporters have the added challenge of finding shipping capacity between Australia and non - Chinese ports, and India is proving particularly difficult to access."

DAIRY

There was some good news for dairy producers with milk prices at the farm gate expected to increase.

"The Australian average farmgate milk price is expected to increase by 7pc to 53 cents a litre in 2021-22 due to stronger global demand. Global prices are expected to ease towards the end of 2021 but remain higher on average in 2021-22 than 2020-21. Strong demand for imports is being driven by China, which has seen an increase in demand for dairy products and is experiencing a high domestic milk price. Global supply is expected to increase due to higher production in New Zealand and the United States and modest milk production growth in the European Union and Australia.

"Australian dairy processors secured export contracts at high prices at the end of 2020-21. This boosted confidence and led to multiple revisions to opening milk prices before the start of the 2021-22 season. These revisions, along with a moderation of world prices, are expected to reduce the likelihood of further price step-ups towards the end of the 2021-22 season."