The possible emergence of El Nino conditions indicates a likelihood of challenging conditions for grain production in eastern Australia in 2023 and perhaps in 2024, with wider potential geographic winners and losers across the globe.

Australia’s rural media often mentions the climatic phase that Australian agriculture is experiencing. In recent years that phase was persistent La Niña conditions. However, the Bureau of Meteorology, as at early May 2022, points to an emerging change in those seasonal conditions. They flag an El Niño WATCH (BOM, 2023). This means that currently (i.e. in early-May 2023) there is approximately a 50% chance of El Niño developing in 2023 which is about twice the normal likelihood.

Currently, a significant amount of warmer than average water exists in the sub-surface of the equatorial Pacific, and warmer than usual sea surface temperatures continue to strengthen in the eastern tropical Pacific. These warming oceans in the eastern and central tropical Pacific, when combined with the currently decreasing Southern Oscillation Index are often precursors to development of El Niño conditions. Further, the Bureau of Meteorology state that all the climate models they have surveyed point to El Niño thresholds being approached or exceeded during the coming 2023 winter in Australia.

La Niña: where Australia has been

Figure 1 shows the general global impact of La Niña conditions. These are the conditions observed during seasons 2021 and 2022. In those years eastern Australia experienced above average rainfall and extensive flooding that although boosting grain production also damaged grain quality in several regions. By contrast, Australia’s southern hemisphere grain export competitor, Argentina, contemporaneously experienced prolonged severe drought. Parts of the southern grain belt in the USA also experienced dryness.

Figure 1: Global La Niña conditions. Source: International Research Institute for Climate and Society

Many key grain producing regions like India, Brazil and eastern Australia are typically favoured by La Niña conditions. The deleterious market impacts of the war in Ukraine, in combination with the La Nina conditions, have yielded for Australian grain producers the very rare twin combination of high grain prices and high yields.

El Niño: where Australia might be heading?

Figure 2 shows the general global impact of El Niño conditions. Whenever El Niño conditions prevail, eastern Australia experiences dryness that often lowers grain yields.

If El Niño conditions emerge globally over the next several months, then the grain market ramifications are potentially serious. Already for many grains their stocks-to-use ratios are currently at or near historical lows. This indicates little grain reserves globally.

Figure 2: Global El Niño conditions. Source: International Research Institute for Climate and Society

When that fairly parlous market situation is combined with the possible adverse grain production outcomes of El Niño conditions, then strong upward pressure on grain prices will likely arise; especially noting that the conflict in Ukraine is likely to continue to jeopardise grain production and grain exports from that important region.

El Niño conditions, when they arise, weaken grain production in major grain producing regions including Brazil, India and eastern Australia. The next several months in 2023 will reveal if El Niño conditions are emerging.

Planting of the 2023/24 winter crop in Australia is underway with growers taking advantage of good soil moisture conditions in the aftermath of the La Niña conditions in eastern Australia. Already early planted crops have germinated well but limited rain during late April and early May is seeing some regions slow down as topsoils dry out (Rural Bank, 2023). Soil and seasonal outlooks, and the expense of fertilisers, may see a reduced planting of canola in favour of more cereals.

References

BOM (2023) ENSO Forecast: An alert system for the El Niño–Southern Oscillation. 

Rural Bank (2023) Insights May 2023: Cropping. 

Banner image: CSIRO