Overview The September edition of Agricultural commodities contains ABARES latest outlook for Australia's key agricultural commodities in 2017-18, which updates the outlook released in June 2017. NOTE: Revision published 20th September 2017. Key Issues Commodity forecasts * The gross value of farm production is expected to decrease in 2017-18, reflecting an expected return to average seasonal yields following record production in 2016-17. * The value of farm exports in 2017-18 is expected to decline from 2016-17. Forecast higher export earnings for livestock and livestock products are not expected to offset the forecast fall in export earnings for crops. Economic assumptions underlying this set of commodity forecasts In preparing this set of agricultural commodity forecasts: * World economic growth is assumed to be 3.4 per cent in 2017 and 3.5 per cent in 2018. * Economic growth in Australia is assumed to average 2.8 per cent in 2017-18. * The Australian dollar is assumed to average US77 cents in 2017-18, higher than the average of US75 cents in 2016-17. Articles and boxes on agricultural issues Recent trends in Australian meat consumption * Domestic consumers are the largest market for Australia's beef cattle, sheep, chicken and pig producers. The Australian market has changed markedly in the 30 years to 2016-17, with per person expenditure on meat declining despite an increase in per person consumption, particularly of chicken meat. * Meat consumption in Australia is forecast to average 108.5 kilograms per person in 2017-18, relatively unchanged from the 10 year average to 2016-17. Seasonal conditions in Australia * Following a drier than average start to winter 2017, late season rainfall has increased soil moisture levels, improved prospects for winter crops and benefited pasture growth in southern Australia. * It is likely that this rainfall has arrived too late to benefit winter crop production in northern New South Wales, southern Queensland and northern Western Australia. * The climate outlook for spring 2017 indicates that there is a roughly equal chance of above or below median rainfall for most of Australia Wheat quality explained * Wheat quality is measured by many parameters, including grain hardness, protein content, grain condition and milling characteristics. Quality attributes vary by wheat variety, and are affected by seasonal conditions during crop development, and harvest and post-harvest treatment. Changes to Australia's wool production by micron * Historically the bulk of Australia's wool clip was mid-range fine wool (in the 19.6 to 24.5 micron range). However, changes in export demand have resulted in bi-modal production. * Increased export demand for apparel wool has resulted in a higher proportion of superfine wool (less than 19.6 microns) as a percentage of the total wool clip. Increased demand for sheep meat has also resulted in a greater proportion of coarse wool (greater than 24.5 microns). Changes in Australian production data for 2015-16 onwards * In the 2015-16 Agricultural Census the Australian Bureau of Statistics (ABS) raised the estimated value of agricultural operations (EVAO) used as the cut-off for the survey. The increased threshold will be applied to all subsequent Rural Environment and Agricultural Commodity Surveys, undertaken by the ABS. * The threshold for inclusion has increased from an EVAO of $5,000 to $40,000. This change reduces the number of agricultural businesses surveyed and therefore lowers estimates of agricultural land area, crop production and livestock numbers. * ABARES has incorporated the ABS figures in this edition of Agricultural commodities and will make all future agricultural forecasts on the basis of the higher cut-off. Understanding ABARES agricultural forecasts * ABARES price forecasting performance over 2016-17 is reviewed and some reasons why forecasts can differ from actual outcomes are discussed.