- Global crop and pasture production conditions continue to be generally favourable for agriculture despite mixed climatic conditions in some countries.
- Global climate outlooks indicate that average to above average rainfall is slightly more likely between March and May 2022 for most of the world's major grain- and oilseed-producing regions.
- The 2021–22 La Niña appears to have peaked or be near its peak. Neutral climatic conditions are more likely in the current 10-month forecast window, with La Niña conditions less likely to persist in 2022–23 or recur over the outlook period to 2026–27.
- In Australia, summer rainfall has benefited 2021–22 production prospects of dryland crops in eastern Australia. Rainfall has been sufficient to maintain average to above average pasture production and support livestock restocking.
- Over the medium-term, conditions for agriculture in Australia are most likely to be adequate but not highly favourable, with a high likelihood of at least one dry year over the next 5 years.
Global rainfall to date
Rainfall over the 3 months to 31 January 2022 was variable for much of the world's major grain- and oilseed-producing regions (Figure 1.1). In the southern hemisphere, rainfall from November to January affects spring and summer crop development and yield prospects. Rainfall over the 3 months to 31 January 2022 was below average across parts of northern Argentina and southern Brazil. In Australia, the late forming La Niña resulted in well above average rainfall across much of eastern Australia. Above average rainfall across Queensland and northern New South Wales boosted crop development and yield prospects for grain sorghum, but delayed harvest and affected grain quality in winter crops.
In the northern hemisphere, November 2021 to January 2022 rainfall is important for the planting and early development of winter wheat and canola crops before entering dormancy. Rainfall was generally below average across parts of the eastern half of the United States. In contrast, rainfall was above average in India, parts of southern Europe and South-East Asia, and the west of the Russian Federation. Rainfall and temperature determine snow cover extent. Snow cover provides insulation for young plants, protecting them from extreme fluctuations in air temperatures. It also builds soil moisture for the upcoming spring.
Notes: World 3-month seasonal precipitation anomalies are in units of mm/season, based on precipitation estimates from the NOAA Climate Prediction Center's Climate Anomaly Monitoring System Outgoing Precipitation Index dataset. Precipitation estimates for November 2021 to January 2022 are compared with rainfall recorded for that period during the 1979 to 2000 base period.
Source: International Research Institute for Climate and Society
Global crop production conditions continue to be generally favourable despite mixed climatic conditions across parts of Argentina, Brazil, Canada and the United States (Figure 1.2). Despite concerns over drought induced poor growing conditions in parts of Argentina and Brazil, record global production levels are expected for corn and soybeans in 2021–22 (see Coarse grains and Oilseeds). Mixed growing conditions have reduced expected global wheat production in 2021–22, but record levels of production are still forecast (see Wheat). Meanwhile, favourable growing conditions are expected to increase global rice production year-on-year in 2021–22.
Notes: Exceptional conditions are much better than average at the time of reporting. Favourable conditions range from slightly lower to slightly better than average at reporting time. Watch conditions indicate that crop health is not far from average but there is a potential risk to final production. The crop can still recover to average or near average conditions if the ground situation improves. This label is only used during the planting-early vegetative and the vegetative-reproductive stages. Poor crop conditions are well below average. Crop yields are likely to be more than 5% below average. Average refers to the average conditions over the past 5 years.
Source: Agricultural Market Information System
Pasture and rangeland conditions
Analysis of the Vegetation Health Index (VHI) for the second 10-day period in January 2022 indicates poor vegetation condition across parts of northern and eastern Africa, in northern and central Argentina, across parts of western and central Australia, southern Brazil, northern Mexico, and the west of the United States (Figure 1.3). This is partly due to dryness and drought conditions in some areas. 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 will possibly constrain exportable supplies of grain.
Note: The FAO's Vegetation Health Index (VHI) is a composite index, combining the Vegetation Condition Index (VCI) and the Temperature Condition Index (TCI). The TCI assumes that high temperatures tend to cause a deterioration in vegetation conditions. A decrease in the VHI would, for example, indicate relatively poor vegetation conditions and warmer temperatures, signifying stressed vegetation conditions. Over a longer period, this would be indicative of drought.
According to oceanic and atmospheric indicators, the 2021–22 La Niña appears to have peaked in January to February 2022 as a moderate strength event. The latest forecasts from the Climate Prediction Center indicate that La Niña is likely to continue into the Northern Hemisphere spring (77% chance during March to May 2022). During the May to July period, the chance of transition to ENSO-neutral conditions is estimated to be about 55%, and the likelihood of an El Niño is near-zero (Figure 1.4).
Source: Climate Prediction Center (International Research Institute for Climate and Society)
The outlook for the second half of 2022 remains relatively uncertain. Model predictions differ considerably, however neutral climatic conditions are more likely in the current 10-month forecast window, with La Niña conditions less likely to persist in 2022–23. The climate outlook is for average to above average rainfall between March and May 2022 for most of the world's major grain- and oilseed-producing regions. The lingering 2021–22 La Niña event is expected to result in below average rainfall for Argentina, southern Brazil, parts of western Europe, west Asia, and southern and western United States.
This below average rainfall outlook follows recent dry conditions in Argentina and southern Brazil and is likely to adversely affect the development of spring and summer crops, including soybeans and corn. Dry conditions have also slowed the planting of winter wheat in the northern hemisphere. If dry conditions continue in the northern hemisphere as crops exit dormancy in spring 2022, this is likely to constrain production in southern Kazakhstan and the United States.
For commodity-by-commodity assessments of the global crop production conditions and country assessments of the climate outlook and potential impact on production conditions, see ABARES Weekly Australian climate, water and agricultural update for 17 February 2022.
World wheat production at record levels despite the effects of La Niña
Drought conditions associated with the 2020–21 La Niña event affected major wheat-producing regions in Canada, the Russian Federation and the United States, with production in 2021–22 decreasing 20% year-on-year in these three key wheat exporting nations. However, this decline in production was more than offset by boosts in wheat production year-on-year in Argentina, Australia, the European Union and Ukraine.
Impacts of the La Niña on world wheat supply in 2022–23 yet to be determined
The US hard red winter wheat crop entered its dormant stage of growth in late November/December struggling with dry conditions associated with the re-emergence of La Niña in 2021–22. Although the 2022–23 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 continue to threaten yield prospects.
La Niña induced production decline for oilseeds in South America
The United States Department of Agriculture (USDA) in its February World Agricultural Supply and Demand Estimates (WASDE) report cut its estimates for South American soybean production. But these projections could be cut even further in the coming months with continuing dry conditions in Brazil’s and Argentina’s main growing regions (Figure 1.5). The USDA lowered its estimate for 2021–22 soybean production in Brazil, the world’s largest producer, to 134 million tonnes, which is 3.6% below last month’s WASDE forecast and down 2.9% from last year’s output. The USDA also trimmed its estimate for Argentine soybeans by 3.2%, to 45 million tonnes, compared with last month’s report.
South America’s upcoming harvests are critical to replenishing currently tight global supplies of many major commodities. But a second consecutive year of drought in Argentina and southern Brazil, brought on by La Niña, means the continent’s agricultural production is headed for significant declines.
Record corn production expected in 2021–22 despite La Niña impacts in South America
Global production of corn affects Australia’s global markets for feed grain (barley and wheat) and canola in biofuel markets. Argentina is the world’s third-largest exporter of corn, and production forecasts have been revised downward due to dryness and drought during the 2021–22 growing season.
While the USDA left Argentine corn production for 2021–22 unchanged in its February WASDE report, Argentina’s Buenos Aires Grains Exchange cut its forecast for the country’s 2021–22 corn harvest to 51 million tonnes, down from its previous estimate of 57 million tonnes. This follows prolonged drought conditions from December to mid-January and concerns are rising again about a new dry spell (Figure 1.5).
Note: The Gro Drought Index (GDI) is processed at the district level and measures drought severity on a scale from 0 or no drought to 5 or severe drought. GDI provides fully automated, high-resolution measurements of droughts worldwide and is based on a Gro machine-learning model that updates daily with 46 separate environmental and climate inputs.
Source: Gro Intelligence
The USDA in its February WASDE report cut its production estimate for Brazilian corn by nearly 1%. While Brazil’s larger, second corn crop is only now being planted, dry conditions in the country’s south, and excess rain in the north, could impact final production further.
This analysis of rainfall, production conditions and the climate outlook form the basis of ABARES forecasts of Australian agricultural production for 2021–22.
Recent rainfall and production conditions for livestock
Following a wet spring across much of Australia, rainfall continued to be average to extremely high between November 2021 and January 2022 in key production regions (Figure 1.6). This rainfall has supported average to above average pasture growth across eastern, central and northern Australia.
However, rainfall was not favourable for agriculture in all of Australia's important agricultural regions. November 2021 rainfall was extremely high across much of Australia and caused widespread flooding resulting in a lack of field access, inundation of pastures and livestock losses for producers in the worst affected areas.
Average December rainfall across most of northern and eastern Australia provided conditions for above average pasture growth, and—by reducing the need to purchase feed—increased incentives for livestock restocking.
Well above average rainfall coupled with mild temperatures during January provided a boost to pasture production for this time of year across most grazing regions in New South Wales, Queensland, northern Victoria, South Australia, northern Western Australia and the Northern Territory. This is likely to have enabled farmers to continue to rebuild stock numbers and provide opportunities to replenish fodder supplies during late spring and early summer.
Notes: Rainfall for November 2021 to January 2022 relative to the long-term record and ranked in percentiles. This analysis ranks rainfall for the selected period compared with the historical average (1900 to present) recorded for that period.
Source: Bureau of Meteorology
While well above average rainfall between November 2021 and January 2022 has been largely beneficial to summer crop production prospects it was not favourable for winter crops across parts of eastern Australia. November 2021 rainfall was extremely high in most cropping regions in Queensland and New South Wales. This led to widespread flooding, weather damage, harvest delays of winter crops, and the inundation and loss of some summer crops. Following extremely high November rainfall totals, substantial December rainfall was favourable for summer crop planting and growth. Average to above average January 2022 rainfall likely further increased the production prospects and yield potential of summer crops planted later in the season.
Soil moisture and rainfall over the entire growing season need to be considered when determining planting opportunities and crop production outcomes for dryland summer crops. Adequate rainfall and high levels of soil moisture during early spring is likely to have boosted planted area of summer crops across southern Queensland and northern New South Wales.
Record high November rainfall in summer cropping regions is likely to have damaged some early sown crops and limited the ability to complete intended planting programs in northern New South Wales. However, improved production conditions during December 2021 and January 2022 boosted production prospects in New South Wales and facilitated additional late summer crop planting in Queensland.
Figure 1.7 and Figure 1.8 show the relative levels of modelled upper layer (~0.1 metres) and lower layer (~0.1 to ~1 metre) soil moisture across Australia for January 2022. Soil moisture estimates are relative to the historical long-term average (1911 to 2016) and presented in percentiles.
Upper layer soil moisture responds quickly to seasonal conditions and often shows a pattern that reflects rainfall and temperature events in the days leading up to the analysis date. Lower layer soil moisture is a large, deeper store that is slower than the upper soil layer to respond to seasonal conditions and tends to reflect the accumulated effects of events that have occurred over longer periods.
Relative upper layer soil moisture levels in January 2022 (Figure 1.7) in southern Queensland and northern New South Wales were mostly average or higher. However, upper layer soil moisture was well below average across the central Queensland cropping region. This is likely to have limited planting opportunities for late sown summer crops. Further rainfall will be needed during February to boost upper layer soil moisture and support germination and establishment of later sown summer crops.
Note: Relative upper layer soil moisture is displayed for Australia. The extremely high band indicates where the estimated soil moisture level for January 2022 fell into the wettest 10% of estimated soil moisture levels on that day each year between 1911 and 2016. The extremely low band indicates where the estimated soil moisture levels for January 2022 fell into the driest 10% of estimated soil moisture levels on that day between 1911 and 2016.
Source: Bureau of Meteorology
Relative lower layer soil moisture levels in January 2022 (Figure 1.8) were average to above average in most cropping regions in Queensland. Lower layer soil moisture levels were generally average to extremely high in cropping regions in northern New South Wales.
Note: Relative lower layer soil moisture is displayed for Australia. The extremely high band indicates where the estimated soil moisture level for January 2022 fell into the wettest 10% of estimated soil moisture levels on that day each year between 1911 and 2016. The extremely low band indicates where the estimated soil moisture levels for January 2022 fell into the driest 10% of estimated soil moisture levels on that day between 1911 and 2016.
Source: Bureau of Meteorology
With generally average or better soil moisture levels in most summer cropping regions, the favourable rainfall outlook for the remainder of the growing season is likely to be sufficient to achieve current forecast summer crop production during 2021–22.
The unseasonably high inflows into reservoir storages in the Murray–Darling Basin during early summer appear to have slowed, with small declines in water storage levels being recorded in early 2022. At 2 February 2022 the volume of water held in storage was around 22,500 GL, or around 90% of total capacity. This was around 8,800 GL or 65% more than at the same time last year and remains at the highest level since 2016–17. Increased dam storages offer favourable irrigated planting prospects in both Queensland and northern and southern New South Wales during both 2021–22 and 2022–23 (see Natural fibres).
For more recent and detailed assessments of agricultural production conditions, see ABARES Weekly Australian climate, water and agricultural update.
Average or better rainfall likely across northern and eastern Australia
According to the Bureau of Meteorology's climate outlook for March to May 2022 (published on 17 February 2022), there is a high chance of recording close to average March to May rainfall in 2022 across northern Australia (Figure 1.9). If realised, this rainfall is likely to support above average pasture growth in northern Australia.
Across most of the remainder of Australia, there is a 50% chance of recording close to average March to May rainfall in 2022. With average or better levels of soil moisture across most cropping regions, this rainfall is likely to be sufficient to support above average crop and pasture production as the summer cropping season ends. By recharging soil moisture profiles, rainfall is also expected to support close to average crop and pasture production as winter crop sowing begins.
Source: Bureau of Meteorology
A lack of seasonal climate forecasts beyond the current year means that ABARES has to make assumptions about the likely climate conditions in years 2 to 5 of the medium-term projections published in March each year.
In this edition of the Agricultural Commodities Report, ABARES has expanded the use of climate scenarios for its medium-term agricultural forecasts. The purpose of moving to scenario forecasts is to better explain the factors driving Australia's agricultural markets. This approach was first introduced in March 2020 (see Seasonal climate scenarios for medium term agricultural forecasts) and aims to use more realistic medium-term assumptions that take into account Australia's highly variable and changing climate. This edition utilises more refined climate scenarios based on an analysis of the most likely climate conditions over the 5 years to 2026–27.
For the upcoming 5-year projection period we have some knowledge of the production conditions likely to be experienced during the upcoming 2022–23 season. Following a late-forming but moderate La Niña event in 2021–22, production outcomes for 2022–23 are more likely to be average to above average due to residual soil moisture, above average pasture biomass and an accumulation of fodder (grain and hay) on farms.
The climate conditions likely to be experienced in subsequent years – years 2 to 5 of the medium-term forecasts – depend to some extent on the conditions experienced during 2021–22. This means that climate scenarios in ABARES March 2022 medium-term forecasts are different to those used in March 2021 and March 2020.
Long-term declines in rainfall mean that the climate conditions most likely to be experienced from year to year over the medium-term are below the historical average, with around decile 4 rainfall most likely (Figure 1.10). However, the variability of Australia’s climate means that it is reasonable to expect that at least one year in years 2 to 5 of the medium-term projections will revert to ‘drought’ like conditions, with decile 1 or 2 rainfall. A return to wetter than normal conditions is less likely in years 2 to 5, but is possible.
Source: ABARES; Bureau of Meteorology
Likely scenarios for underlying climate drivers in 2022–23 are:
- neutral year – most likely, and most climate models favour this scenario
- multi-year La Niña develops – low probability, with only 25% of all La Niña events on record lasting for 3 years
- El Niño develops in 2022–23 – very low probability, with only 15% of all La Niña events since 1970 having been directly followed by an El Niño event.
Likely scenarios over the remainder of the projection period 2023–24 to 2026–27 are:
- neutral years – most likely outcome in most years, with 24 out of 53 years since 1969–70
- El Niño – likely to occur at least once, having occurred every 3 to 5 years since 1969–70
- La Niña – least likely, having occurred every 3 to 7 years since 1969–70.
For a more detailed explanation of climate scenarios in ABARES medium-term agricultural forecasts see the Agricultural overview.
f ABARES forecast.
Source: Bureau of Meteorology
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