El Nino Forecast by Australia as All Models Predict OnsetJake Lloyd-Smith
An El Nino will probably start as soon as July, according to the Australian government forecaster, strengthening predictions for the event that can affect weather patterns worldwide and roil commodity prices.
All the climate models surveyed indicated that an El Nino was likely this year, with six of seven models suggesting that thresholds for the event may be exceeded as early as July, the Bureau of Meteorology said in a statement today. A warming of the Pacific Ocean, which drives the changes by affecting the atmosphere above it, will probably continue in the next few months, the Melbourne-based bureau said.
El Ninos can bake Asia, while bringing wetter-than-usual weather to parts of South America and the U.S., challenging farmers from Indonesia to Brazil with too little rain or too much. Palm oil and sugar were listed by Goldman Sachs Group Inc. this month as among crops that may be affected if an El Nino sets in. The World Meteorological Organization warned last week of a dramatic rise in world temperatures should an El Nino reinforce human-induced warming from greenhouse gases.
“The odds were balanced a month ago or so, now they are clearly in favor of an El Nino event developing,” Tracey Allen, a commodities analyst at Rabobank International in London, said in a telephone interview. “Among the main commodities that an El Nino tends to influence from a production point of view, we see palm oil, raw sugar and cocoa.”
An El Nino would boost risks to soft-commodity price forecasts, Goldman Sachs said. The last El Nino to form was in 2009 to 2010, and since then the Pacific has either been in its cooler state, called La Nina, or neutral.
“El Nino has an impact across much of the world, including below-average rainfall in the western Pacific and Indonesian regions,” the Australian bureau said today. “For Australia, El Nino is usually associated with below-average rainfall, with about two thirds of El Nino events since 1900 resulting in major drought over large areas of Australia.”
The chances of an El Nino have increased to 65 percent from 52 percent, the U.S. Climate Prediction Center said on April 10. There are signs that an El Nino is imminent, presaging changes to global weather patterns, the UN’s World Meteorological Organization said April 15. Two weeks ago, the Australian bureau put the odds at more than 70 percent.
“It’s looking likely that we’ll have El Nino this year,” said David Dawe, a Bangkok-based senior economist at the United Nations’ Food and Agriculture Organization, commenting on the probable impact on the rice market. “Usually the countries that are most affected by this are Indonesia and the Philippines. By coincidence, these all are importing countries.”
Global stockpiles of rice are high and supplies are ample, Dawe said. While there may be less rain in Indonesia and the Philippines, any decline in production isn’t likely until early next year, he said.
“The market is reasonably well positioned to withstand a shock from El Nino,” Dawe said. “If we get El Nino conditions in June, July and August, that affects the planting decisions made by farmers in November and December.”
The price of 5-percent Thai white rice dropped to $391 a metric ton on March 26, the lowest level since at least April 2008, amid record government reserves in Thailand after a state-buying program. The grade, a weekly benchmark across Asia, was last at $396 a ton on April 9.
Global food costs climbed 2.3 percent in March to the highest level since May, according to a 55-item gauge compiled by the FAO that includes prices of grains, meat, dairy products and edible oils.