While previously farmers welcomed a cut in interest rates, some were this week wondering whether the financial turmoil behind the move would further weaken demand for agricultural commodities if the world heads into recession.

Commodities prices have dropped from the historic highs of earlier this year, as investors desert the market and as demand moderates.

"All the froth has come off agricultural commodity prices now. We're almost back to the levels where we were two to three years ago," says ANZ economist, Paul Deane.

"All the hype of the commodity boom being different this time - well, obviously it wasn't, to some extent. But I think we're certainly getting back to the sound fundamentals and you'd have to think the market would start to find some support around those levels."

The fall in recent months in global prices for wheat - Australia's biggest agricultural export - show how a year that many believed was shaping as a boom for farmers could fall short.

Wheat futures on the Chicago Board of Trade have fallen about 40pc in US dollar terms in the past six months and are down 15 to 20pc in the past month.

But the steep depreciation of the Australian dollar since it approached parity with the greenback in July has shielded Australian farmers - who export about 60 to 70pc of their produce - from the full impact of the slide in commodity prices.

The Australian Stock Exchange price for milling wheat fell about five per cent in the past week to yesterday morning, 13pc in the past month and 25pc in the past six months.

Thus, farmers who planted a big grains crop when prices were at historic highs in March will be reaping substantially lower returns than seemed probable earlier this year.

Also, in the eastern States, many farmers would have hesitated to lock in prices when they were high, as they were burnt last year when the season failed and they could not deliver a crop that they had already forward-sold.

Despite the drop in prices, Mr Deane says that, to a certain extent, agriculture exports are shielded from the volatility affecting some other commodities, as demand for food is less elastic than for many products.

He says the outlook is still good for agriculture in the medium-term, given projections of global population growth and dietary changes.