Strong El Nino Seen Unlikely by Australia as Pacific Cools

By | July 15, 2014

The odds of a strong El Nino, which brings drought to the Asia-Pacific region and heavy rains to South America, are increasingly unlikely after the tropical Pacific Ocean cooled, according to Australia’s weather bureau.

A general lack of atmospheric response over the last month resulted in some cooling, the Bureau of Meteorology said on its website today. Warming of the ocean over the past several months had primed the conditions for the event, it said.

El Niño’s can roil world agricultural markets as farmers contend with drought or too much rain. Palm oil, cocoa, coffee and sugar are most at risk, Goldman Sachs Group Inc. estimates. Rabobank International has warned the size of a global sugar deficit next season will depend on how El Nino develops, while the event may spur a 22 percent rally in palm oil prices, according to Dorab Mistry, director at Godrej International Ltd.

“While the majority of climate models suggest El Nino remains likely for the spring of 2014, most have eased their predicted strength,” the Melbourne-based bureau said today, referring to the season in the Southern Hemisphere. It maintained an alert for the event.

Five of eight international models signal El Nino will probably develop by the end of spring, with about half indicating the event will be established by September, the bureau said. The odds of an El Nino during the Northern Hemisphere summer are about 70 percent, the U.S. Climate Prediction Center estimates.

Monsoon Rains
The degree of tightening in the sugar market depends on El Nino, Rabobank said in a report e-mailed yesterday. The bank predicted a 900,000-ton deficit for 2014-2015 from a 1.4 million ton surplus in 2013-2014. Poor monsoon development and the prospect of the event may hurt yields in India, the world’s second biggest producer, it said.

The chances of a drought in the country increased to 60 percent from 25 percent in April amid forecasts for El Nino, Skymet Weather Services, a New Delhi-based private forecaster, said July 4. Showers in June were the lowest since 2009. The monsoon accounts for more than 70 percent of annual rainfall.

Palm oil may climb to 2,800 ringgit a metric ton by December if the weather event occurs from mid-August, Mistry said June 26, cutting his March forecast for a rally to 3,500 ringgit. A rise may be capped if an El Nino starts later than expected, he said. Prices, which entered a bear market yesterday, traded at 2,298 ringgit in Kuala Lumpur today.

Australia’s weather bureau said July 1st that while surface temperatures in the tropical Pacific were at levels typically associated with a weak El Nino, sub-surface temperatures had cooled and there wasn’t the corresponding atmosphere change to support a declaration.

El Niño’s, caused by periodic warmings of the tropical Pacific, occur every two to seven years and are associated with warmer-than-average years. The last El Nino was from 2009 to 2010, and the Pacific has either been in its cooler state, called La Nina, or neutral since then.

Topics Australia

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