PRINTABLE VERSION   EMAIL TO A FRIEND   RSS FEEDS 10:51 UK, 11th Dec 2012, by Agrimoney.com
Aussie officials warn over US drought potential

Australian farm officials cautioned over the potential for another year of US drought, amid continued concerns over the return of the La Nina weather pattern linked to dry US summers.

The Abares commodities bureau nudged higher by $10 a tonne, to $360 a tonne, its forecast for average 2012-13, wheat prices as measured by values of US hard red winter wheat in Gulf of Mexico ports.

The upgrade reflected a cut of 9m tonnes, to 656m tonnes, in Abares' forecast for world wheat production, curtailed by downgrades to crops in countries including Argentina and Australia itself.

And prices could prove "markedly higher" still if dry weather continues to test winter wheat seedlings in the US and parts of the former Soviet Union.

"If current dry conditions persist in some major producing countries, including the US, world wheat prices are likely to average significantly higher in the second half of 2012-13 than currently forecast," Abares said.

'Episodes of persistent drought'

It was "possible that dry conditions will persist well into 2013", the bureau said, echoing a forecast from official US meteorologists that, while some improvement in drought is expected in the Midwest, drought conditions in major wheat growing regions will extend to February.

"Should this eventuate, it would have significant implications for the US crop outlook in 2013-14, leading to higher than currently forecast world prices for wheat, coarse grains and oilseeds in the second half of 2012-13, and possibly beyond," Abares analyst David Mobsby said.

He also highlighted America's history of extended periods of drought, most notoriously in the Dust Bowl of the 1930s.

"While unfavourable seasonal conditions in major cropping regions have mostly been confined to around one season over the past 100 years, several episodes of persistent drought occurred during the 1930s, 1950s and the late 1980s.

"In each period some major cropping regions were classified as being severely to extremely dry for an extended time."

Currently, regions responsible for more than half US wheat production are in moderate-to-extreme drought.

'May be symptom of a La Nina'

Furthermore, "parts of south-eastern Ukraine and the Southern Federal District of the Russian Federation remain dry, presenting a downside risk to the regional production in 201314," Mr Mobsby added.

The cautions come amid mounting concerns that the La Nina weather pattern - blamed by some commentators for the hot and dry weather which depressed US corn and soybean yields in 2011 and, in particular, this year may be about to return.

Gail Martell, at Martell Crop Projections, said: "Sea surface temperatures have chilled down 1.3 degrees Celsius since mid-November in the equatorial Pacific Ocean," a key area for monitoring La Nina conditions.

"Dry weather in south Brazil in recent weeks may be symptom of a La Nina signal."

The dryness in the US appears to show that "a La Nina signal is present.

"This climate fluctuation is a known drought maker, suppressing the sub-tropical jet stream in winter. The southern jet stream is normally the primary source of winter rain in the southern Great Plains."

Last week, Plains Grains, which represents producers on the US Plains, warned that growers could abandon more than one-quarter of their winter crop, given conditions currently worse than in 1988-89 and 2001-02, when such levels of write-off were more lately recorded.

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