Japan says El Nino emerges, raising fears on food prices

Monday, 13 August 2012 00:01 -     - {{hitsCtrl.values.hits}}

TOKYO (Reuters): Japan’s official weather bureau said on Friday there are strong signs the El Nino weather phenomenon has emerged and will last until winter, adding to fears about global food supplies already hit by drought and soaring prices.

Corn prices have surged more than 60 percent in the past two months as the United States reels from the worst drought in 56 years. Global soy supplies are also tight after a drought slashed South American soy production.

Adding to worries, the UN’s Food and Agriculture Organisation said on Thursday the world was closer to a repeat of a 2008 food crisis because of a spike in prices.

El Nino-triggered drought can cause widespread disruption to crops in Australia, parts of Africa, Southeast Asia and India, but can bring rain to other parts of the globe.

Latest data suggested the El Nino phenomenon had emerged, the Japan Meteorological Agency said, referring to conditions in the equatorial Pacific.

“The chances are high that the El Nino phenomenon will be maintained until the winter,” the agency said in a statement.

El Nino is a warming of sea-surface temperatures in the equatorial Pacific that occurs every four to 12 years. It is the opposite of the very closely related La Nina pattern, which often triggers floods in Australia and parts of Asia. Intense back-to-back La Nina episodes occurred during 2010-12.

The US Climate Prediction Centre, part of the National Oceanic Atmospheric Administration (NOAA), also warned on Thursday that an El Nino was almost certain to occur over the next two months.

The last severe El Nino in 1998 caused drought in Australia and Southeast Asia, withering crops and triggering forest fires.

El Nino can also bring warmer, wetter winters in Japan and parts of North America, but any rains might be too late for the US corn crop.

Worry about Indian crops

A growing worry is the impact on India, where lower than average monsoon rain has threatened cereal and pulses production, although the rain has picked up in the past week.

The worry about drought, though, remains because of the erratic nature of this year’s monsoon and because El Nino can cause drier weather over much of the country during the northern hemisphere summer.

Three years ago, an El Nino slowed development of monsoon rains, sparking a rally in sugar prices to 30-year highs as India, the world’s second biggest producer, harvested a poor cane crop.

But the phenomena raises the chances of favourable planting conditions in South America for corn and soy.

“There may be areas that are adversely affected, but no two El Nino are the same. It is certainly a risk but it doesn’t mean that we are going to have a disaster,” said Luke Mathews, a commodities strategist at the Commonwealth Bank of Australia.

He said the bank was expecting good crop production in South America over the next six months and that there was enough soil moisture in eastern Australian cropping zones to buffer against a drought.

El Ninos also generally lead to a decrease in storms in the Atlantic and Gulf of Mexico and the weather will be keenly watched by the oil industry. The US government forecaster said on Thursday El Nino would bring near-normal to above-normal storm activity. The hurricane season runs to Nov. 30.

El Nino means “little boy” in Spanish and was first used by anchovy fishermen in Ecuador and Peru the 19th century to refer to the arrival of unusually warm ocean waters around Christmas time.