The nation's agricultural sector can expect a strong economic performance this year, according to the latest outlook from agribusiness banking specialist Rabobank.
But the annual report warns the sector is unlikely to replicate last year's "exceptional" performance.
Analysts found that a standout year in 2022 with record commodity prices and strong production levels has put the country's farmers in a good position for the year ahead.
"2023 will bring many opportunities (but) those with overly inflated expectations of a repeat of 2022 might be disappointed as the world heads into recession," the agribusiness outlook found.
Beef, dairy, grain, oilseeds and canola prices hit record levels in Australia in 2022 alongside some record production levels.
Those record high commodity prices were driven by the war in Ukraine, COVID-related supply chain issues and labour shortages as well as volatile input prices.
But the forecast found while 2023 prices will be above the five year average, they're set to track at less elevated levels.
The report's lead author Stefan Vogel told AAP commodity prices had been pushed down by high input costs and warnings of a global recession.
"The margins in our view will still be all right in 2023, but probably not as strong as they have been in 2022," he said.
Mr Vogel said high production volumes were also expected this year.
"Favourable weather conditions in 2022, with much of the east coast having received plentiful rainfall, even too much in some cases, have provided good soil moisture levels and also filled supplies for irrigation," he said.
"And while the rainfall outlook for 2023 isn't as high, this should also mean less weather disruptions for the sector."
"The outlook for volumes are rather optimistic for the grain side, also ... we're looking at an increase in beef production," Mr Vogel said.
He said cost pressures will continue to impact the farm sector, with costs expected to remain above average.
While there has been some relief for farmers with global fertiliser prices almost halving since prices peaked last year.
"Although locally fertiliser prices have not fully replicated this extent of decline," Mr Vogel said.
He said a return to the high fertiliser prices seen last year was unlikely.
The report found freight rates for both dry containers and bulk have fallen "massively" back to normal levels as recession fears weighed on the trade outlook.
"Australia is likely to avoid a recession, but inflation remains a concern locally and globally," the report said.
It found heightened interest rates will impact both consumer demand and trade.
The forecasters expect Australia's labour shortages to continue, while a slight strengthening expected in the Australian dollar will help with the costs of imports.
