The El Nino viewed as an increasing probability is not all
bad for agricultural commodity production said, and should be "welcome" to corn
and soybean growers besides being a threat to the likes of Australian grain
Meteorologists have this month raised the chance of the
weather pattern developing later this year, with Japan's weather bureau putting
the probability at greater than 50%, and the US Climate Prediction Center
estimating at 52% the chance of a Pacific trigger developing late this summer
or early autumn.
An El Nino is linked to warm Pacific water temperatures,
besides to differences in air pressure flagged in particular between Tahiti and
Darwin in northern Australia.
The Australian Bureau of Meteorology last week termed the
formation of El Nino triggers as "likely", noting that westerly winds over the
far western Pacific the strongest since the at least 2009, when the weather
pattern last developed.,
But the coming of an El Nino would not be all bad news for
Certainly, the weather pattern is linked to dryness in
eastern Australia, depressing grain yields.
"El Nino is often, but not always, associated with below-normal
rainfall during the second half of the year across large parts of southern and
inland eastern Australia," the Australian Bureau of Meteorology said, noting
that it tends to bring unusually hot weather to southern Australia too.
El Nino is already being blamed for dryness which is depressing
palm oil production in Indonesia and Malaysia below levels that might be
expected in a seasonally low period, and is viewed as a negative for cocoa
By bringing dryness to West Africa, the weather pattern is blamed
for typically reducing yields in the world's main production area, and also
tends to cause excessive rains in western South America, and in particular in
Ecuador, a major cocoa-growing country.
"For cocoa, the impact [of El Nino] tends to be negative for
production," soft commodities analyst Judith Ganes-Chase said.
However, for coffee "there are mixed results", Ms
Ganes-Chase said, adding that for sugar "production is surprisingly not as
impacted as one would expect".
Indeed, London-based broker Marex Spectron said that El Nino
"only really has a disastrous effect on sugar production if it causes the
Indian monsoon to fail, and there is no sign of that".
Although Indian sugar production plunged by more than 10m
tonnes in 2009-10, during the last El Nino, that was "mainly" due to a turn
away from cane by farmers amid a high level of payment arrears from mills.
"Anyway, water levels in India are 30% higher than one year
ago, due to last year's above-average monsoon and subsequent rains," Marex
'Means very good
In South America, corn, soybean and cotton producer SLC
Agricola downplayed the threat to Brazilian crop production, saying that an El
Nino, "normally" means "very good production" in the country.
It "means very good rains in the south" of the country, with
limited negative impact elsewhere, Aurelio Pavinato, the SLC Agricola chief
executive, told investors.
"During the El Ninos, in the north-eastern region, normally
the rainfall is normal, is okay."