FARMERS in NSW and Queensland face the prospect of a bleak winter with forecasts of lower than average rain for the next three months, which could affect the quality and yield of winter crops.
The latest crop report from the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) to be released on Wednesday also warned the El Nino weather pattern - characterised by low rainfall - was beginning to strengthen, particularly in the eastern states.
The report said the start of the winter crop season had been favourable, with above-average rainfall in March.
"However, it is likely there will be below-average winter rainfall in the cropping regions in southern Queensland and most of NSW," it said.
The return of the El Nino weather pattern was been widely forecast but ABARES warned its impact on winter crops would be mixed.
"The impact on crop yields from an El Nino event is not uniform and is difficult to predict because the timing of any rainfall is also significant. An El Nino event typically has less impact on rainfall in Western Australia than in eastern Australia."
Farmers in NSW and Queensland have been hit by a worsening drought with more than 80 per cent of Queensland now afflicted by drought.
The federal government announced a $333 million drought assistance package in April, including $35 million for local infrastructure to stimulate regional economies and $26 million to manage pests and weeds in drought-affected areas. This was followed by $70 million in May's federal budget to assist primary producers to claim accelerated depreciation for water facilities, fodder storage and fencing.
Despite the drier conditions, winter crop production is set to rise 1 per cent to 38.7 million tonnes, with wheat to remain the dominant crop at 23.6 million tonnes.
Barley production is expected to increase by 3 per cent to 8.2 million tonnes, while canola production is expected to fall 13 per cent to three million tonnes due to drier weather and lower relative returns.
Total winter crop production is expected to drop in NSW, but rise by 13 per cent in Queensland to 1.6 million tonnes.
However, yields are expected to be lower because of the drier outlook over winter.
Total summer crop production is estimated to have fallen by 4 per cent to 3.8 million tonnes in 2014-15. The decline was driven by falls in production of cotton and rice.
Grain sorghum production is estimated to be up by 39 per cent in 2014-15 to 1.8 million tonnes, reflecting increases in the average yield and planted areas.
About two-thirds of El Nino events since 1900 have been associated with drought over large areas of Australia.