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El Nino signal very strong

The other big unexpected factor for Tuesday was the declaration by Australian and Japanese
meteorologists that El Nino was back, after five years.
The weather pattern can have big effects on crop production, associating with, for example,
dryness which in South East Asia which saps palm oil output and in Australia which curbs
grains output and in Central America which can dent coffee harvests.
It can also bring rains to parts of South America, and North America, where "rainy conditions
are typical in the US heartland when the El Nino is in effect," said Gail Martell at Martell Crop
Projections
"The El Nino signal is very strong currently."
'Weather is key'
It has to be said that not all the El Nino influences are negative for production, with moisture
in the US, for instance, potentially upbeat for corn output, on a "rain makes grain" basis.
However, for some investors the El Nino factor was more important than the USDA's Wasde
briefing, with Societe Generale highlighting the importance of the weather pattern.
"Weather is key," the bank restated, adding that history shows that "sugar and cotton prices
respond positive within the first month" of an El Nino event.
(Cotton prices failed to follow the script on Tuesday, ending down 0.6% at 65.02 cents a
pound in New York for July delivery, despite too the USDA saying that Chinese sowings of the
fibre will be the lowest since 1949.)

International climate models surveyed by the bureau indicate that tropical Pacific Ocean
temperatures are likely to remain above El Nio thresholds through the coming southern
[hemisphere] winter and at least into spring."
'Below-average rainfall'
The world was put on alert for an El Nino last year, and while it was never deemed to have
full developed, some mild versions of weather patterns typical of the event emerged, with
dryness for instance in South East Asia early in 2015, which has caused some downturn in
palm oil production.
However, a fully-fledged El Nino would be likely to cause more significant effects, with the
Australian Bureau of Meteorology noting that, for example, the even " is often associated

with below-average winter and spring rainfall over eastern Australia, and above-average
daytime temperatures over the southern half of the country".
The bureau's statement comes only the day after Australian fertilizer-to-explosives group
Incitec Pivot cautioned that thanks to dryness "Australian growing conditions at the moment
look quite challenging for the winter crop", which is currently being planted.
'Heavy rainmaker'
Other weather conditions typically associated with El Ninos include dryness in parts of
eastern South America, and potentially damaging dryness for instance for Colombian coffee
plantations, and a lack of rain too in West Africa, the main cocoa-producing region.
Conversely, parts of southern Brazil can receive excessive rainfall, potentially hampering
cane harvesting and lowering sugar concentrations in crop albeit boosting agricultural
yields.
In the US, El Nino is associated with cool and wet weather in many major growing areas
which could resolve drought in southern states and boost Midwest corn yields - albeit
potentially impairing the quality of crops such as wheat.
Indeed, "heavy, recurring showers in the Great Plains and Midwest may be consequence of a
strengthening El Nino," said Gail Martell at Martell Crop Projections.
"This climate anomaly is a heavy rainmaker for the central US."
Top price performers
Other weather factors linked to El Ninos include weak Indian monsoons. Official Indian
meteorologists have already forecast a slightly below-average monsoon this year, with rains
at 93% of the typical rate.
Indeed, research by Societe Generale has revealed cotton, of which India is the top
producer, as a commodity which has witnessed "significant price spikes during El Nino
periods", with cocoa and soybeans too.
Indeed, top-performing US-traded agricultural commodity during El Ninos is typically soyoil,
according to the bank, as South East Asian dryness saps output of rival vegetable oil palm oil.
Soyoil is "highly correlated to palm oil that can be impacted by drought in Indonesia and
Malaysia", SocGen said in a report last year.
Unpredictable
However, the ability to make accurate predictions of El Nino impacts is hampered by the
range of other effects also influencing weather patterns.

In Australia, the Bureau of Meteorology said that while El Ninos typically bring east ern
dryness, "the current May to July outlook suggests much of Australia is likely to be wetter
than average.
"This is because a warmer-than-average Indian Ocean is dominating this outlook."
It is not until the second half of 2015 that El Nino "is expected to become the dominant
influence on Australian climate".
In the last El Nino, in 2009-10, while weather in the May-to-October period conformed to the
typical pattern, proving "rather dry over much of the country", November, "paradoxically
ushered in a wet period over the eastern half of the country".