The weather setbacks to the US corn crop may not end with the easing of heat and dryness – with the too much moisture at harvest time potentially a problem, thanks to the El Nino weather pattern.

The US Department of Agriculture is expected later on Monday to reveal a further decline in the condition of domestic corn and soybean crops, thanks to hot and dry weather last week.

"We would expect condition numbers to keep sliding lower, as it has been a brutal week in almost the entire Corn Belt," Mike Mawdsley at broker Market 1 said.

However, even corn which made it little-damaged through the adverse weather – more typical of the La Nina pattern – into the cooler temperatures now expected may suffer later in the year from harvest-time setbacks if there is a switch to El Nino conditions, as many indicators suggest, Macquarie said.

Official forecasts in Australia, New Zealand and the US have warned of increased chances of the onset of an El Nino, linked to warm Pacific water temperatures.

'Hamper harvesting activity'

"Most weather models reflect increased chances for El Nino beginning in the July-to-September period," Macquarie said.

"Indications are that we will be in a moderate El Nino for the remainder of summer and autumn into this winter."

In the US, El Ninos have historically tended to bring cooler and wetter weather "as we move into winter", the bank said.

"If rainfall starts early, this could hamper harvesting activity due August-to-October."

In the last El Nino period, which started in 2009, the US corn harvest was greatly delayed by excessive moisture, which forced some fields to be carried over for combining after winter, and which delayed spring sowings too.

'Bullish for sugar'

Some initial effects of the El Nino may already be evident in India's weak monsoon, which has suffered a 30% shortfall in precipitation so far, and the heavy rains hurting sugar cane harvesting and coffee quality in Brazil.

"El Ninos are typically bullish for sugar," Macquarie said, warning that the weather pattern would likely "lead to above-average rainfall in southern regions [of Brazil] for the remainder of the cane-crushing season".

However, for Argentine and Brazilian soybean farmers, El Nino rains could boost yields – depending on their timing.

"Additional rainfall could be very good if they arrive before the plantings window in the October-to-December quarter by providing moist soil.

"This risk is that heavy rains could delay plantings."

Coffee, cocoa, wheat

For coffee, the El Nino could have a variety of effects outside Brazil, including drier weather in Colombia, which may already be evident in recovering production data following months of rain-effected harvest.

In Vietnam, the weather pattern "may return in a drier-than-usual climate" for cherries to develop in.

For cocoa, El Nino events "tend to be, on balance, bullish", Macquarie said, echoing comments from Rabobank, while wheat investors should be aware of "a risk that below-normal precipitation returns to Australia this quarter".

Shorter-term, Luke Mathews at Commonwealth Bank of Australia said that "excellent rainfall is forecast throughout much of the Australian grain belt this week".

Official meteorologists were predicting that "25mm-50mm will fall in New South Wales and Victoria while more modest falls are expected in Western Australia, South Australia and Queensland".