Seasonal conditions: December quarter 2020

Emma Pearce and Matthew Miller

 

Favourable global production conditions despite mixed rainfall

Rainfall conditions to date

Rainfall over the 3 months to 31 October 2020 was variable for the world's major grain-producing and oilseed-producing regions. In the northern hemisphere, August to October 2020 rainfall, which is important for development and yield prospects of spring wheat, canola crops and summer crops, was generally below average across parts of the United States, Canada, Mexico, Ukraine and the south-west and central-east of the Russian Federation. In contrast, rainfall was above average across parts of the United Kingdom, eastern Europe, India, eastern China, South-East Asia and the south-east of the United States. This rainfall also affects starting soil moisture conditions and farmers' planting decisions for winter wheat and canola crops to be harvested in 2021.

In the southern hemisphere, rainfall from August to October tends to affect winter crop development and yield prospects and starting soil moisture conditions for summer crops. Rainfall over the 3 months to 31 October 2020 was below average across much of Brazil and parts of Argentina.

Crop conditions

Global crop production conditions continue to be favourable despite mixed climatic conditions across parts of the European Union, Ukraine, China, the United States, Argentina, Australia and the south of the Russian Federation. Generally favourable global growing conditions are expected to result in record levels of corn and soybean production in 2020–21. Mixed growing conditions have reduced expected global wheat production in 2020–21, but record levels of production are still forecast. Meanwhile, favourable growing conditions are expected to see global rice production increase year-on-year in 2020–21. For commodity-by-commodity assessments of the global crop production conditions, see ABARES Weekly Australian climate, water and agricultural update–19 November 2020.

Global climate outlook mixed

The climate outlook is for average to above average rainfall between December 2020 and February 2021 for most of the world's major grain-producing and oilseed-producing regions. The current La Niña event is expected to result in below average rainfall for the southern United States, central Russian Federation, southern Brazil and much of Argentina. This below average rainfall outlook follows recent dry conditions in parts of Brazil and Argentina and is likely to adversely affect the development of summer crops including wheat, soybeans and corn. Dry conditions have also slowed the planting of winter wheat in the northern hemisphere. An outlook for further dry conditions could reduce snow cover insulation and damage crops during dormancy in the United States and the Russian Federation. For country-by-country assessments of the climate outlook and potential impact on production conditions, see ABARES Weekly Australian climate, water and agricultural update–19 November 2020.

La Niña events are characterised by cooler-than-normal surface waters in the equatorial Pacific Ocean. Persistent dry conditions associated with La Niña are most likely to occur in Argentina, southern Brazil and across the US Southern Plains, where the country's hard red winter (HRW) wheat is grown.

The influence, timing, and duration of La Niña's impact on global rainfall is not uniform. La Niña conditions typically reduce rainfall for regionally varying periods ranging from 4-months (November to February) to 7-months (November to May) in East Africa, the southern United States, the northern Middle East, southern Central Asia, Afghanistan, Pakistan, southern India, southern Brazil, northern Argentina, eastern China and the Korean Peninsula. Meanwhile, southern Japan typically sees reduced rainfall from November to January. La Niña conditions typically increase rainfall for similar regionally varying time periods in South-East Asia, southern Africa and southern Central America. Australia and Indonesia. Northern South America and northern India typically see increased rainfall from June to January during a La Niña event.

The previous La Niña event observed in 2017–18 had an intensely adverse influence on North American and South American agriculture. In early 2018 Argentina harvested its worst soybean crop in 9 years and Brazilian corn production was well below average. US HRW wheat yields were poor that year and dry conditions continued to affect the subsequent corn and soybean growing season.

The strength and persistence of this current La Niña event will be crucial in determining the potential agricultural impacts. Stronger sea surface temperature anomalies were recorded in 2017–18 than in 2016–17, and this assisted in keeping ocean temperatures much cooler than normal throughout that event. In 2017–18 the strong cold sea surface temperature anomaly was evident from November to March. Had it weakened earlier, the negative impact on cropping outcomes in North and South America would likely have been lessened.

La Niña may reduce global agricultural production

The El Niño-Southern Oscillation (ENSO) is currently in a La Niña phase, with very cool ocean conditions in the eastern equatorial Pacific. The National Oceanic and Atmospheric Administration (NOAA) has indicated that La Niña conditions are expected to continue through January to March (around 95% chance) and potentially through March to May (around 65% chance).

Wheat

Argentina is the third-largest producer of wheat in the world, and a major exporter of wheat to Brazil. Dry conditions associated with La Niña are affecting Argentina's main wheat-producing regions just as crops are maturing. Of the 4 main wheat-growing provinces, Cordoba and La Pampa in central Argentina are experiencing moderate drought conditions and Entre Rios and Buenos Aires provinces are abnormally dry. The Buenos Aires Grain Exchange has subsequently reduced its 2020–21 wheat harvest estimate (see Wheat).

A shortfall in Argentine production this season is likely to be more than offset by favourable wheat harvests in Australia and Canada, which would help to support global supplies. However, the United States is also struggling with dry conditions which may reduce total supplies in 2021.

Planting of the US hard red winter (HRW) wheat crop is almost complete with sowing staring in September. The 2021 US HRW crop enters its dormant stage in late November/December and will not be harvested until July/August next year. Although the 2021 crop is only in the early stages of crop development, dry conditions in the US Southern Plains due to the influence of the La Niña climate event already threaten to reduce yields. Current climate forecasts indicate reduced rainfall in Kansas, the main state for US HRW production. Kansas, Oklahoma and Texas make up approximately 70% of US HRW wheat production. The yields from these 3 states are key determinants of US production. The USDA's Weekly Weather and Crop Bulletin published on 24 November 2020 indicated that the American winter wheat crop is in worse shape than expected. The bulletin reported nationwide crop condition to be at a combined 43% for the excellent and good categories. This is 9 percentage points below the good to excellent condition score for this time last year. This combined excellent to good score at the end of November is the second lowest in the past 20 years, only after the record low of 33% in 2013.

Oilseeds

La Niña often creates hot, dry weather in southern Brazil and central Argentina, leading to drought in some of the world's most important soybean producing and exporting regions. Dry conditions have already delayed planting of the 2020–21 summer soybean crop and may reduce planted area in Argentina and Brazil. If low rainfall persists during the growing season, production will be affected even further.

Brazilian exports compete with US exports for market share in China, so US farmers stand to see less competition if La Niña effects are significant this year.

Corn

The soybean-producing regions of Brazil and Argentina are also a significant source of corn production and exports. Argentina is the world's third-largest exporter of corn and production forecasts are being revised downward due to dryness and drought. A lack of sufficient soil moisture in the country's prime production regions of Cordoba, Santa Fe and Entre Rios has delayed the planting of early corn. The delayed soybean season will also result in delays in planting of the second, later corn crop in both countries. These adverse production conditions have led the Buenos Aires Grain Exchange to revise down their production estimate for 2020–21. Argentine growers are now expected to harvest 47 million tonnes of corn, which is 9% lower than 2019–20 production.

Corn sowing in Argentina, typically starts in early September for harvest in April/May. The second Argentine corn crop, which is planted in December/January and harvested in June/July, could also be affected if the below average – La Niña influenced – rainfall outlook is realised. China has been importing significant amounts of corn. Any production shortfall in exporting countries will affect global balance sheets and reduce available supplies.

La Niña will likely benefit Australian agricultural production

A La Niña during late spring and summer is likely to bring above average rainfall to eastern and northern Australia. These conditions are likely to generate favourable growing conditions for summer crops and pasture production. This La Niña event is expected to be relatively strong, persisting until at least the end of February 2021. The significant increase in winter crop production in 2020–21 is more a result of a consolidated early autumn break and well above average August to October rainfall across south-eastern Australia, rather than the influence of this late forming La Niña event.

The last strong La Niña event in Australia was in 2010 to 2012 and resulted in one of Australia's wettest 2-year periods on record. Widespread flooding occurred in many parts of Australia associated with the record rainfalls. Tropical cyclone activity in the 2010–2011 season was near normal. However, 5 of the tropical cyclones during 2010–11 were in the severe category, which is above average. This included Tropical Cyclone Yasi, which caused widespread damage to Far North Queensland.

The impact of a La Niña event on agricultural production is not uniform and is difficult to predict. Although La Niña is often associated with above average rainfall in Australia, the impact of a La Niña depends on the timing, strength and persistence of events, and the behaviour of other climate drivers, and can have a significant effect on crop and pasture production. Several of the La Niña events since 1970 have not had any significant effect on the volume of Australian farm production.

In those years when total farm production increased in association with a La Niña event, the increase can mainly be attributed to a boost in crop production. During La Niña events, the volume of livestock production often decreases as producers increase the retention of productive breeding stock across both cattle and sheep markets—tightening domestic livestock supply—and lending support to the national herd and flock rebuild.

The 2010 to 2012 La Niña was an early forming and long-lived event that was enhanced by the influence of a negative Indian Ocean Dipole (IOD). In contrast, the current La Niña was late forming and is weaker than at the same point in the 2010 to 2012 La Niña. At least for the 2020–21 summer growing season, the current La Niña event is not likely to have the same impact on Australian agriculture as the strong La Niña in 2010 to 2012.

Australian production prospects good at end of spring

The analysis of rainfall, production conditions and the climate outlook presented here were used to update ABARES forecasts of Australian agricultural production for 2020–21.

Following below average rainfall from May to July across much of southern Australia, much of Australia recorded average to extremely high rainfall from August to October. This rainfall supported average to above average pasture and crop growth across south-eastern Australia.

Moderate, but variable rainfall during October largely benefited agricultural production across New South Wales, Victoria, South Australia and the Northern Territory. However, in some growing regions October rainfall had localised adverse impacts on hay production and grain harvest and may have reduced the quality of crops that were ready to harvest. In contrast, low rainfall, higher than average temperatures and low soil moisture were recorded in south-western Western Australia during October. Following below average rainfall during winter and the start of spring, these conditions have reduced crop yields in Western Australia. The area planted to summer crops in northern New South Wales and southern Queensland is expected to increase significantly in 2020–21 due to the favourable rainfall outlook for summer.

 

 

Reservoir storage levels have continued to improve in the Murray–Darling Basin water supply system. At 12 November 2020 the current volume of water held in storage is 15,562 GL, which represents 61% of total capacity. This is 55% or 5,553 GL more than at the same time last year. Increased dam storages offer favourable irrigated planting prospects in southern New South Wales (see Natural fibres).

For a more comprehensive assessment of recent agricultural production conditions and potential impact on production, see ABARES Weekly Australian climate, water and agricultural update–5 November 2020.

Climate outlook for Australian agriculture

Average or better rainfall likely across northern and eastern Australia

The Bureau of Meteorology's climate outlook for December 2020 to February 2021 (released on 19 November 2020) suggests that the chance of exceeding median summer rainfall is greater than 65% across most of Australia, and greater than 75% across parts of northern and eastern Australia.

The Bureau of Meteorology's forecast indicates a 75% chance of receiving between 100 mm and 300 mm across much of eastern and northern Australia between December 2020 and February 2021. Rainfall totals greater than 300 mm are likely across the tropical north and much of the eastern coastline of Australia and are associated with the onset of the northern wet season and the Australian monsoon. These high rainfall totals are almost equivalent to the seasonal median (between 1990 and 2012) and represent an excellent start to the 2020–21 summer cropping season in eastern Australia and wet season across northern Australia. There is a high chance of recording December to February rainfall totals sufficient to sustain above average crop and pasture production through summer.

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