Seasonal conditions

Prices for Australia's agricultural commodities are largely set in world markets. The climatic and agronomic conditions faced by producers in importing countries influence the demand for agricultural exports. Similarly, climatic and agronomic conditions experienced in exporting countries influence the amount of competition between exporters in world markets.

The forecast volume of global grain and oilseed production in 2023–24 is expected to be slightly lower than in the June Agricultural Commodities Report. A downwards adjustment to wheat and coarse grain production – reflecting below average rainfall and above average temperatures in recent months – has more than offset an upwards revision in rice production, while oilseed production remains unchanged. In Australia, the volume of crop production in 2023–24 is forecast to be lower, while the forecast volume of livestock production is expected to be higher than in the June Agricultural Commodities Report. This reflects lower than expected rainfall in some key crop production regions and increased livestock slaughter with the expected El Niño conditions.

Extreme weather events impact northern hemisphere

A broad range of crop production outcomes is being recorded across global grain and oilseed producing regions as a result of variable climatic conditions. July 2023 was wetter than average for most of northern Europe, in the region from the Black Sea and Ukraine to northwestern Russia, over north-eastern North America, north-eastern China, across India, southeast Asia, and the United Kingdom, northern and eastern Australia and in parts of southern Brazil (Figure 1.1). Days of heavy rain have caused severe flooding in China's major grain producing region in the northeast, affecting summer crops. However, July rainfall in other grain and oilseed producing regions in the northern hemisphere has brought relief to those areas that experienced a dry and hot end to spring and early summer. These falls are likely to curtail further reductions in crop yields.

Figure 1.1 Rainfall anomaly map for July 2023

Much of Canada and the western United States were dry in July and the conditions in Canada produced many wildfires. While these wildfires have had little direct impact on grain and oilseed producing regions, smoke plumes have covered large areas of Canada and the northern United States reducing available sunlight and limiting crop growth at the peak of the growing season. The Asian monsoon had a variable start across south Asia, with excess rainfall recorded in western India, while rainfall deficits were evident across eastern India, southeast Asia and southern China.

June and July 2023 had the highest global surface temperature on record (Figure 1.2). The average global temperature for July was the highest on record and was 0.72°C warmer than the 1991–2020 July average. A series of heatwaves across countries bordering the Mediterranean Sea, across northern China, the Midwest and north of the United States and much of Canada, coupled with dry conditions have hampered the growth of crops such as spring wheat, corn and soybeans.

Figure 1.2 Global temperature anomaly maps

Current global crop conditions vary across regions

At the end of July, conditions were mixed for wheat, corn, rice, and soybeans (Figure 1.3). Winter wheat harvesting is progressing in the northern hemisphere while spring wheat is developing, and the southern hemisphere experienced improved growth conditions following July rains. Corn harvesting is nearing completion in Argentina under poor conditions, while droughts persist in the northern hemisphere as rains ease. Early-season rice harvests continue in China while kharif transplanting picks up in India, and conditions are favourable in southeast Asia except for Thailand. Recent rains improved soybean conditions in the United States and China, while sowing in India caught up after an initial delay.

The United States Department of Agriculture's (USDA) August World Agricultural Supply and Demand Estimates (WASDE) report indicates the following global production levels for these four major grain and oilseed crops in 2023–24:

• Wheat is down by a modest 3.3 million tonnes from the USDA’s July estimate, which is reflected in a decline in Canada and the EU's wheat production. However, the projected 2023–24 total production is higher than the 2022–23 estimate by 3.4 million tonnes.
• Corn is down by 11 million tonnes compared to the July estimate, which is reflected in a decline in China, the US and Russia's corn production. However, the 2023–24 projected total production is higher than the 2022–23 estimate by 62 million tonnes.
• Soybean is down by a modest 2.5 million tonnes from the July estimate. However, 2023–24 total production is expected to be 33 million tonnes higher than the 2022–23 estimate, which is reflected in the increased projected soybean production in South America.
• By contrast, Rice remains similar to its July estimate of 520 million tonnes. However, this projected 2023–24 total production is 8 million tonnes higher than the 2022–23 estimate, which reflects an increase in rice production in Pakistan and Myanmar.

Figure 1.3 Global agricultural conditions status as of July 28, 2023

Analysis of the Vegetation Health Index (VHI) for July 2023 indicates poor vegetation conditions across parts of tropical and southern Africa, much of South America, across western and eastern Australia, parts of northern Europe, Mexico, and the western United States and Canada, due to prolonged dryness and drought conditions in many areas (Figure 1.4). Poor vegetation health is likely to reduce the availability of grass for direct grazing and increase the reliance on other fodder, such as feed grains, to supplement livestock diets and maintain production. This is likely to lead to increased domestic feed grain consumption in affected areas and possibly constrain exportable supplies of grain. See the Weekly Climate Update for the latest 3-month average pasture production in Australia.

Figure 1.4 World Vegetation Health Index - July 2023

Developing El Niño to drive global climatic conditions through the remainder of 2023

The Bureau of Meteorology has yet to officially declare that an El Niño event is underway, despite most international meteorological organisations, including the World Meteorological Organisation, announcing that an El Niño event is already established in the Pacific.

This is largely due to definitional differences, but what both the Bureau of Meteorology and most international meteorological organisations agree on is that the Australian 2023 spring is likely to be drier and hotter than usual.

This expected El Niño event will be the dominant driver of global rainfall conditions in the coming months. A drier than normal spring 2023 is forecast for Australia, northern South America and the Maritime Continent (Figure 1.5). If realised this is likely to have a deteriorating effect on grain and oilseed production.

Figure 1.5 Global rainfall outlook for spring: September to November 2023

Between September to November 2023, Africa is expected to receive average to well above average rainfall. North America is expected to receive generally average rainfall with pockets of regions receiving above average (such as northwest and southeast United States and northern Canada) and below average (such as southwest United States and western and eastern Canada) rainfall. The United Kingdom, Europe, eastern Ukraine and Russian Federation are expected to receive average to below average rainfall. Average rainfall is expected across much of India, except parts of the northwest where below average rainfall is likely and the south where above average rainfall is likely. Rainfall in China is expected to be generally average with isolated areas receiving above average (central and northern) and below average (western and eastern) rainfall.

A positive Indian Ocean Dipole, which is likely to develop in early spring, will further influence climate conditions in countries along the Indian Ocean rim with wetter conditions in eastern Africa and southern India and drier conditions in the Maritime Continent and central and south-eastern Australia.

Highly variable June to July rainfall was recorded nationally, with much of northern and central Australia being extremely wet from unseasonal rains and a series of cold fronts, while the west and coastal east were extremely dry (Figure 1.6). June was also warmer than average (7th highest on record since 1910 for June) nationally, as was July (9th highest on record since 1910 for July).

Following a dry May 2023 across most winter cropping regions, average to above average June rainfall benefitted crop and pasture growth and boosted root zone soil moisture levels across southern New South Wales, Victoria, South Australia and central and southern Western Australia. In contrast, below average to average June rainfall was insufficient to arrest further declines in soil moisture across northern New South Wales, Queensland and northern cropping areas of Western Australia. In northern New South Wales and Queensland these dry conditions have likely led to a significant decline in winter crop yields, they would have aided timely completion of summer crop harvest, such as cotton and sorghum.

Unseasonal high rainfall in July in Queensland brought some relief to the northern cropping regions, halting any further decline in yields. However, it was insufficient to boost sub-soil moisture reserves, which are very much at below average levels. July rainfall was variable across New South Wales, Victoria and South Australia ranging from below average to average, providing sufficient moisture to maintain average or better production conditions in most regions except for northern New South Wales. In Western Australia, July rainfall was highly variable ranging from well below average across the northern and eastern fringes of the cropping region, to below average in the central region, to average in the south. There have been numerous reports that rainfall has only been enough to sustain crop growth and provided little improvement to soil moisture levels.

August to date rainfall (as at 20 August 2023) has been generally average across much of southern New South Wales, Victoria, eastern South Australia, and southern Western Australia. This has maintained close to average or better than average crop and pasture production levels across most southern growing regions and close to average soil moisture levels (Figure 1.7). However, little to no August rainfall across northern New South Wales, Queensland, western South Australia, and northern Western Australia has seen a further decline in soil moisture levels and is expected to further lower crop and pasture production in these areas.

Following variable production conditions during the 2023 winter, the expected El Niño conditions may lead to further declines to both winter and dryland summer crop production and is likely to lead to low pasture and fodder production. A drier than normal spring will negatively impact winter crop yields and may lead to a decreased area sown to summer crops. El Niño also presents a risk of both heat stress and elevated late frost risk. While the latest scientific research indicated a reduction in the number of frost events in recent decades in the southeastern Australia, the frost season length has increased and some areas in the south experience their last frost in late October. Frosts during flowering and the grain filling stage (i.e., in spring) can reduce crop yields.

Figure 1.6 June-July rainfall decile

Figure 1.7 Relative Root Zone Soil Moisture on 20 August 2023

Irrigated crops

Reservoir storage levels have improved slightly in the Murray-Darling Basin water supply system. On 24 August 2023 the volume of water held in Murray–Darling Basin storages were around 20,983 GL, or around 94% of total capacity. While this is 2% or 507 GL less than at the same time last year, it remains the second highest level since 2016–17.

High water storage volumes, high irrigation allocations, substantial levels of carryover water, historically low irrigation allocation prices and improved planting conditions are all likely to lead to strong irrigated crops and horticulture production in 2023–24.

Hot and Dry spring 2023 is expected

Below median spring rainfall is likely to very likely (60% to greater than 80% chance) for much of Australia (Figure 1.8). Among several factors, this forecast takes into account the developing El Niño and positive Indian Ocean Dipole. There is 75% chance of spring rainfall being less than 25 millimetres across large areas of central and northern Australia (Figure 1.9). Parts of the tropical north, southwest Western Australia and much of eastern Australia are likely to receive up to 200 millimetres and western Tasmania is expected to receive in excess of 300 millimetres rainfall.

In cropping regions, below median rainfall is more likely, with a 75% chance of receiving between 25 and 100 millimetres across most winter cropping regions, except for northern cropping regions in Western Australia where falls are expected to be below 25 millimetres. In areas with average or higher levels of soil moisture, if realised, these falls may be sufficient to support close to average plant growth. In areas with low soil moisture, such as southern Queensland, north-western New South Wales and northern and eastern Western Australia, these probable below average rainfall totals are unlikely to be sufficient to sustain average levels of crop and pasture production, particularly with higher temperatures and increased water demand for crops and pastures in spring.

Figure 1.8 Chance of exceeding the median rainfall

Figure 1.9 Rainfall totals that have a 75% chance of occurring in September to November 2023

There is also an over 60% chance of daytime and night time temperatures exceeding the spring median across Australia. In addition to moisture availability, spring temperatures are an important determining factor in final crop yield outcomes for winter crops. This is due to crops being highly sensitive during flowering and grain filling growth stages if they experience high temperatures (> 35°C) or low temperatures (< 2°C). Both heat stress and frost can negatively impact crop yield.

Later than usual northern rainfall onset is likely

The northern rainfall onset outlook provides an indication of the timing of the first significant rains after the dry season. The onset occurs when the total rainfall after 1 September reaches 50 millimetres. This is considered approximately the amount of rainfall required to stimulate plant growth and provide northern Australian livestock producers with their first indication on the season ahead and assist with pasture and herd management decisions.

Parts of coastal Queensland and the western Top End typically accumulate 50 millimetres by late October or early November, spreading further south and inland over following weeks. The southern inland regions of the Northern Territory and Queensland, as well as western parts of Western Australia usually have the latest northern rainfall onset, around mid-January. During El Niño years, the onset date tends to be later than normal, while during La Niña years, the northern rainfall onset tends to be earlier than usual (Figure 1.10).

A later than usual 2023–24 northern rainfall onset is likely for most of northern Australia (Figure 1.11). This includes most of Queensland, the Northern Territory and northern Western Australia where there is a 60-70% chance of later than usual rainfall onset. However, an early rainfall onset is likely for some inland areas of Gascoyne and interior districts of Western Australia and Yulara district in the Northern Territory.

Figure 1.10 Median onset dates in El Niño years

Figure 1.11 Chance of Northern rainfall onset in 2023–24

A later than normal northern rainfall onset across cropping regions of eastern Australia is likely to allow uninterrupted harvesting of winter crops, but impede the early sowing of summer crops, especially in areas that have already received below average rainfall throughout winter. The expected delayed onset is likely to see lower than normal pasture production across much of Australia’s tropical north, with livestock conditions and the maintenance of herd numbers relying on pasture grown throughout the previous wet season. However, an early onset across central Australia will boost soil moisture for northern pastures in those areas.