Effects of Improved Climate Forecasting on Competitiveness in the International Grain Market

Hammer, G.L. Dr; ph: (07) 4688 1200; fax: (07) 4688 1193; mailto:HammerG@prose.dpi.qld.gov.au

Research organisation: Queensland Department of Industries/APSRU, PO Box 102, Toowoomba Qld 4350.

Collaborator: Texas A&M University (Dr J.W. Mjelde)

Sponsors: NOAA, US Government

Aims:

1. To evaluate the role of improved climate forecasts on international competitiveness in the wheat market

2. To evaluate the impact of improved climate forecasts for both Australia and the United States on their competitiveness in the international wheat market

Methodology:

Several studies at farm scale have demonstrated the value of tactical adjustment of farm management to a seasonal climate forecast. Other studies at national scale have also indicated strong associations between climate forecasts and commodity yields.

This project examines the role of improved climate forecasts on international competitiveness in the international grain market using a world trade model that takes account of supply and demand relationships. Crop simulation studies are employed to determine optimal production inputs based on improved forecasts. These studies are used to obtain estimates of farm, regional, and national supply of wheat in Australia and US based on use of forecast information. These supply estimates are compared with estimates derived without use of improved forecasts. These supply estimates are utilised in a world trade model that was enhanced as part of the project.

Progress:

Crop simulation studies were conducted for US, Canada and Australia. Sites throughout the wheat growing regions were used. Relative differences in wheat production associated with differing levels of price and differing season types, based on Stone's SOI phase system, were calculated. The relative differences were applied to regional scale models to derive supply curves of production vs price for all seasons

for specific season types. The simulations were also used to examine the influence of grower response to the forecast on the supply curve. Results showed significant impact of season type on the average supply curve for each country, but comparatively small effect of grower management response. There was considerable year-to-year variability associated with the average supply curve and the various countries had differing responses. These factors will influence the global effect on price, which is currently being investigated with a simple world trade model. The supply curve analysis was presented in a special symposium of the American Society of Agronomy meetings at Baltimore in Oct 98. An ASA special publication is being prepared and should be available in 1999

Period: starting date 1996-07; completion date: 1997-06

Status: completed

Keywords: grain forecasts; international grain markets

Publications: None as yet