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El Nino wouldn't be all negative for crop production

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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 farmers.

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.,

'Negative for production'

But the coming of an El Nino would not be all bad news for farmers.

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 output too.

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.

India factor

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 said.

'Means very good rains'

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."


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