April 12 (Bloomberg) -- El Nino, the weather pattern that caused $96 billion of crop and property damage in 1997 and 1998, may be returning.

An unexpected warming of the Pacific Ocean in February reduced air pressure from Tahiti to Australia to a 22-year low. A similar change eight years ago developed into an intense El Nino that caused droughts in Asia, floods in South America and tornadoes in the U.S.

``It's more than double the normal risk,'' said Roger Stone, 58, an associate professor of climatology at the University of Southern Queensland in Australia. The chances of an El Nino pattern developing by midyear are about 50 percent, compared with 20 percent normally, Stone said.

The return of El Nino, which emerges first in Australia and takes months to develop, may worsen droughts that parched coffee trees in Vietnam, sugarcane fields in India and Thailand and soybean plants in Brazil, boosting the cost of products such as Procter & Gamble Co.'s Folgers coffee. Already, GE Insurance Solutions, a unit of General Electric Co., halted sales of agricultural policies to new clients.

``If you're running an insurance company, that's enough to start changing your risk profile assessments,'' said Stone, who accurately predicted an El Nino in 2002 that triggered Australia's worst drought in a century. He's been tracking El Nino patterns for more than two decades.

GE's Concern

``It's a 50-50 chance,'' said Karl Schneider, worldwide manager for agricultural insurance for GE Insurance Solutions in Winterthur, Switzerland. ``El Nino will affect us worldwide in agriculture. In 1998, the last bigger one, we had losses in Latin America.''

The prospect of an intensifying El Nino and GE's desire to balance its risk profile led the company to stop offering agricultural insurance to new clients last year, Schneider said last week in a phone interview from Port Douglas, Australia, where he was attending an El Nino conference. Policies are still being written for existing customers, he said.

``The lead indicators have us worried about another El Nino situation,'' said Sunny Verghese, chief executive of Olam International Ltd., one of the largest exporters of coffee from Vietnam. ``In terms of crop production, it is a risk. Clearly we are seeing that in Vietnam.''

Coffee Prices

Drought in Vietnam, the world's second-largest coffee grower, sent the cost of beans to a five-year high last month and prompted Procter & Gamble and Kraft Foods Inc. to raise retail prices. At least a third of the Vietnamese crop has been damaged. The price of robusta coffee, the variety grown in Vietnam, has surged about 27 percent in London this year to $964 a metric ton.

Parched cane crops in India and Thailand pushed sugar to almost a four-year high, while a dry spell in Brazil sparked a 21 percent rally in soybeans since Feb. 4.

El Nino, which means ``little boy'' in Spanish, got its name from Peruvian fishermen who noticed that warmer sea temperatures reduced their catch around Christmas. An El Nino occurs about two to three times a decade and can last 18 months.

The pattern is fueled by rising Pacific Ocean temperatures coupled with a drop in barometric pressure that shifts the warm waters east, moving clouds and moisture to the Americas and reducing rainfall in Asia and Australia.

A stronger pattern, when surface temperatures in the tropical Pacific are more than 2 degrees Celsius (3.6 degrees Fahrenheit) warmer than average, increases the probability of worse tornadoes and droughts. An El Nino that developed in 2003 was classified as weak, and the 1997-98 version was very strong.

Below the surface, the Pacific is more than 4 degrees Celsius warmer than average, Australia's weather forecaster said April 6. That warmer water should reach the South American coast later this month, increasing surface temperatures along the way, the Australian Bureau of Meteorology in Melbourne said.

Australian Cattle

The last El Nino in 2003 parched two-thirds of Australia, the world's second-biggest wheat and beef exporter, reducing profit for grain exporter AWB Ltd. and cattle producer Australian Agricultural Co. The drought slowed the economy by about 1 percentage point, slashed farm exports by 27 percent and led to the loss of 100,000 rural jobs and higher food prices.

Parts of Australia are having their worst drought in a century. ``We're desperate for rain,'' said Will Abel Smith, who is raising 185,000 cattle at S. Kidman & Co., Australia's third- largest rancher.

Abel Smith has reduced his herd by about 12 percent the past year on concern drier weather will force competitors to sell cattle they can't feed, flooding meatpackers with livestock and causing prices to crash. Cattle prices in Australia plunged 29 percent in 2002, the peak of the last El Nino, and are down 10 percent since Jan. 1 to A$3.423 per kilogram per ($2.65 per 2.2 pounds).

`Desperate for Rain'

The Southern Oscillation Index, which tracks monthly fluctuations in air pressure between Tahiti and Darwin, Australia, fell from 2 in January to minus 29 in February, the lowest since 1983. Over the past 90 days, the index averaged minus 9. A reading of minus 10 indicates a warming trend consistent with El Nino, said Andrew Watkins, a climatologist with the Australian weather bureau's National Climate Centre in Melbourne.

U.S. weather forecasters, who see the risk of El Nino fading this year, may be forced to change their predictions when the warmer sea-surface temperatures arrive, Southern Queensland's Stone said.

Model Indications

``The models haven't yet woken up to the fact that we have had these very strong westerly wind bursts, that the Southern Oscillation Index has dropped and that the subsurface sea temperatures have heated up,'' Stone said.

El Nino conditions don't usually develop until May, and forecasts made in March and April are among the least reliable, said Fei-Fei Jin, professor of meteorology at Florida State University in Tallahassee.

``The current subsurface warming in the central Pacific is a transient event and may not be considered as a definitive indicator,'' Jin said in a March 21 e-mail. ``However, there is a general tendency of equatorial heat content recharge plus the huge plunge in the Southern Oscillation index. Both conditions may favor the emergence of an El Nino event in 2006.''

To contact the reporters on this story: Jason Gale in Singapore at j.gale@bloomberg.net.; Angela Macdonald-Smith in Sydney at amacdonaldsm@bloomberg.net

Last Updated: April 11, 2005 19:13 EDT