A weak El Nino will probably develop by the year-end, according to MDA Weather Services.
While sea-surface temperatures are warmer than normal across most areas in the tropical Pacific ocean, it still doesn’t qualify as an El Nino, Kyle Tapley, senior agricultural meteorologist at MDA in Gaithersburg, Maryland said in response to e-mailed questions on Oct. 20. Some additional warming could lead to the development of a weak El Nino, he said.
The Australian Bureau of Meteorology maintained its El Nino watch status this week, indicating at least a 50 percent chance of a late-season event. El Ninos can move agricultural markets as farmers contend with drought in Asia or too much rain in South America. Palm oil, cocoa, coffee and sugar are among crops most at risk, according to Goldman Sachs Group Inc.
“We are currently near the threshold of a weak El Nino, in what we call the positive neutral phase, where the waters are warmer than normal, but not quite warm enough to be classified as an El Nino,” Tapley said. “It is likely we will see a weak El Nino develop by the end of this year.”
Two of eight models are just shy of thresholds for an El Nino, while another three models show thresholds will be reached by January, the Melbourne-based Bureau of Meteorology said Oct. 21. While a weak El Nino is possible, the chances of a moderate- to-strong one is “very low”, said David Streit, co-founder of Bethesda, Maryland-based Commodity Weather Group LLC.
El Ninos, caused by periodic warmings of the tropical Pacific, occur every two to seven years and are associated with warmer-than-average years. The last moderate El Nino occurred in 2009-2010, according to the U.S. Climate Prediction Center, which predicts that a weak El Nino might still form in the next 30 to 60 days across the equatorial Pacific.
Dryness can curb palm production as the trees need about 150 millimeters to 200 millimeters of monthly rainfall. Palm oil output in Indonesia, today the largest supplier, dropped 7.1 percent at the time of the last strong El Nino in 1997-1998.
Shower activity has been below normal in the past month in southern Sumatra, southern Borneo and Java where rain was less than half of normal, Streit said by e-mail Oct. 16. Rains are expected in the region in the next two weeks, he said yesterday.
Over the past month, it has been quite dry across southern Sumatra and Kalimantan palm oil areas, while northern Sumatra and Malaysia have seen rainfall near normal, MDA’s Tapley said on Oct. 16. Rains were expected to continue across Malaysia and northern Sumatra over the next couple of weeks and will increase in Kalimantan, favoring palm, Tapley said then.
Sumatra and East Malaysia are key oil-palm regions, with Indonesia and Malaysia representing 86 percent of world supply.
Palm futures rose 1.1 percent to a two-week high of 2,194 ringgit ($668) a ton on Bursa Malaysia Derivatives today. Prices slumped to 1,914 ringgit on Sept. 2, the lowest since 2009.
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