"We've Been Warned": El Nino Watch Initiated As Ag-Industry In Crosshairs
This week, the Climate Prediction Center of the National Oceanic and Atmospheric Administration released an El Niño Watch, indicating the increasing likelihood of the weather-altering phenomenon developing in the Pacific Ocean. If El Niño does form, it could result in heavy rainfall and heatwaves in specific regions across the globe, potentially causing disruptions in the agricultural industry.
A watch is issued when conditions are favorable for the development of El Niño within the next six months. The Climate Prediction Center said probabilities have risen over the last month from 61% to 74% of an El Niño emerging between August and October.
Time to watch for El Nino! 👀 NOAA’s Climate Prediction Center issued an El Nino watch in today’s monthly update.— National Weather Service (@NWS) April 13, 2023
See more at: https://t.co/znXWQK8Rzg pic.twitter.com/nbfHeUq059
El Niño refers to a climate pattern that arises when the Pacific Ocean's equatorial region experiences warming, which then reacts with the atmosphere to cause weather shifts worldwide.
On the commodity front, Bloomberg analyst Jake Lloyd-Smith said El Niño might impact harvests in the second half of the year:
So the parade of warnings that a disruptive El Nino pattern may be on the way is critical for commodities as it carries the potential to roil palm oil, sugar, and cocoa to list just a few.
The latest to wade are the folk at the US government, who've issued an El Nino watch. The pattern forms when the equatorial Pacific warms and reacts with the atmosphere to disrupt weather the world over. In this neighborhood, it can crimp rainfall, drying out crops and possibly cutting harvests. In India and New Zealand, forecasters have also signaled their concern recently. That follows similar messages from Australia, Peru, and the Philippines. The pack, it seems, is well and truly on the move.
There's a two-step process at work here. First, while the probability of an El Nino setting in has been increasing, it's not a certainty yet. And second, even if one does form, the events vary tremendously in their intensity. The one that sticks in my mind is the appalling event of 1997-98 that played out as a vicious backdrop during the Asian Financial Crisis. Right now, we've been warned.
El Niño's effect on crop yields could further strain the already stressed global food supply chain, leading to an increase in prices and making it harder for central bankers to cool inflation. As readers know, elevated food prices and the soaring cost of living in emerging market nations can ignite social unrest, creating a perfect storm of adverse economic and political consequences.
Is this all setting the stage for a major food crisis this year?