Editor's note: This story has changed in order to correct information provided to the ABC by ABARES. ABARES originally stated the soil mapping project compared soil moisture from January 2014 to the previous 100 years. In fact, the soil comparison was completed for the years between 1961 and 1990.

The national commodities forecaster has released a map confirming a savagely dry start to 2014 for vast areas of important agricultural production land.

The Australian Bureau of Agricultural and Resources Economics and Sciences (ABARES) annual conference began in Canberra on Tuesday.

The map, produced under the Australian Water Availability Project, measures the upper layer soil moisture across the country as at January 2014.

Those 2014 measurements are compared with the January soil moisture levels for each year between 1961 and 1990, the timeframe that's used around the world as the baseline reference period for climate analysis.

The report found that January 2014 ranks among the three driest years in that reference period.

Much of Australia's prime sheep and wheat producing land, as well as some other agricultural districts nationwide, have been affected by poor soil moisture.

While the drought came late enough in the season to not affect winter crop plantings of wheat, canola and barley in some areas, it has significantly cut summer crop plantings like sorghum, cotton and rice, with a 25 per cent drop in production forecast.

ABARES, working off seasonal outlooks by the Bureau of Meteorology, is assuming a return to more normal conditions for the remainder of 2014 and into 2015. As a result, a decrease in the number of animals to slaughter is expected.

However, the agency concedes that if conditions stay dry, or get drier, then prices for livestock could fall even further.

"Seasonal conditions over the next few months will be critical for 2013–14 summer crop production and winter crop planting for the 2014–15 season. Without sufficient rainfall to improve soil moisture, the area planted to canola in eastern Australia would be adversely affected because canola is more sensitive to soil moisture than other major winter crops, such as wheat and barley," the report says.

Incomes on the rise, for some

For farmers in WA and South Australia, ABARES is predicting incomes to increase to the highest level in 30 years, mostly due to bumper crops and an improved live export market for beef.

But for producers in the drought-affected parts of Queensland and New South Wales, the prediction is not so positive, with a sharp drop in income likely.

While grain producers were able to weather lower production thanks to higher grain prices, livestock and dairy producers were less fortunate as a high dollar hurt export markets and costs for dairy farmers remained high even as milk prices plummeted.

"In 2013–14, incomes are projected to increase for dairy farms in all states as a result of higher milk prices. This is despite reductions in milk production and increased expenditure on fodder resulting from the drier conditions."

Beef producers in Queensland, grain growers in the WA wheatbelt and dairy farmers in western Victoria were among the worst affected with loss of income.

"Farm business profit for Australian broadacre farms is expected to average $17,000 per farm in 2013–14, about the same as in 2012–13.

"This compares with an average of $68,000 per farm in 2011–12 and $72,000 in 2010–11, two very wet years when broadacre farm financial performance on-farm was more even across states and industries, cattle numbers were increasing and grain stocks were higher."

Dollar to continue its fall

ABARES predicts the Australian dollar will continue to depreciate against its US counterpart.

Broadacre farming includes five industry types: Wheat and other crops industry: specialised producers of cereal grains, coarse grains, pulses and oilseeds.

Mixed livestock–crops industry: farms engaged in producing sheep and/or beef cattle in conjunction with substantial activity in broadacre crops such as wheat, coarse grains, oilseeds and pulses.

Sheep industry: specialised producers of sheep and wool. Sheep industry farms account for only 30 per cent of Australia’s wool production. Most wool and sheep meat production occurs on mixed enterprise farms, particularly on mixed livestock–crop industry farms.

Beef industry: properties engaged mainly in running beef cattle, which currently account for around 65 per cent of Australia’s beef production. This industry consists of many small farms.

Sheep–beef industry: properties engaged in running sheep and beef cattle. This industry consists of many small farms.

The bureau forecasts the ongoing recovery from the global financial crisis will see the dollar lose some value, but remain strong in an historical context.

And it's China that will be the key to whether terms of trade continue to weaken or there is further downward pressure on the Australian dollar.

"With growth expected to strengthen in many world economies, prices of commodities are expected to remain at relatively high levels, providing support to the Australian dollar. However, if economic prospects for China were to worsen, significant downward pressure on the Australian dollar would result."

While the 30-year average sits at US76 cents, ABARES believes the AUD will remain at between US83-85 cents out to 2019.