Impact El Nino on Agricultural commodity markets

Top Commodities today -Impact El Nino on Agricultural commodity markets : The water in some areas is now within 0.9 degree Fahrenheit (0.5 degree Celsius) of the level seen during the El Niño of 1997-8, Australia’s Bureau of Meteorology said, with temperatures expected to peak later this year. El Niños occur when winds in the equatorial Pacific slow or reverse direction, causing the water to warm over a vast area, which in turn can upend weather patterns around the world.

The El Niño of the late ’90s brought severe drought to parts of Southeast Asia and heavy flooding to North America. This year’s hasn’t yet had such dramatic effects, and experts say the likely impact is still hard to predict.

Agricultural commodity markets were relatively untroubled by the Australian weather bureau’s latest data Tuesday. In the past, nonfuel commodity prices have risen an average 5.3% in the 12 months following the announcement of an El Niño event, according to an International Monetary Fund working paper.

This year soft-commodity prices have fallen sharply, in line with commodities generally, on concerns that softening growth in China will hit demand. However, the threat of lower production brought on by inhospitable growing conditions has limited price drops for the likes of coffee, cocoa and palm oil.

The only factor posing upside risks to some agricultural commodities, including palm oil, remains El Niño,that any impact will likely be offset by ample stocks. Sugar prices remain at multiyear lows, for example, with the International Sugar Organization estimating that stockpiles this month could reach 83 million metric tons, equal to nearly half of annual global consumption.

Dry conditions attributed to El Niño are already being seen in parts of Southeast Asia, Central Africa and South America, with India—one of the world’s top producers of rice, sugar and cotton—receiving 12% less rain than normal from June 1 through Aug. 31. Concerns remain that wetter-than-normal conditions in southern Brazil in the next two months could dent the sugar harvest there

Rain is also below normal in coffee-growing Vietnam, Indonesia and Central America, as well as Ivory Coast and Ghana—where 60% of the world’s cocoa is produced—forcing analysts to lower their crop-yield expectations. Cocoa prices were volatile in August due to concerns about the crop, according to analysts at Rabobank.

I think markets have been waiting for some clearer signs that El Niño is starting to have an impact on production and how this will shape global supplies,

U.S. soybean crops have benefited from ideal growing conditions so far, while Australia’s wheat crop has had above-average rainfall. Australia’s wheat futures prices remain near 12-month lows on expectations of a good yield.

Impact El Nino weather on coffee prices, Impact El Nino weather on Cocoa prices, Impact El Nino weather on Corn prices, Impact El Nino weather on soybean prices, how will Impact El Nino commoditiy market

Tweet