The La Nina weather system could roil global food production, sending prices higher, as potential droughts and floods bring upheaval to a suite of key agricultural commodities from Southeast Asia to South America.
The highly anticipated phenomenon has officially formed, the US Climate Prediction Center announced on Thursday, after the last significant La Nina event occurred in 2011.
During that period, upheaval in commodity production led to steep increase in world food prices, with the UN’s Food & Agriculture World Food Price Index surging to a record in February 2011, up 37 percent from the end of 2009.
La Nina typically affects a broad range of farm commodities, as it brings above-average winter-spring rainfall in Australia, particularly across eastern, central and northern regions, as well as in Southeast Asia, with the potential for flooding.
It can also dry out the southern US through winter, bringing cooler temperatures and storms across the north.
In South America, croplands in Argentina can become more arid, with drought possible across parts of Brazil.
“The weather phenomenon disrupts production of a broad range of agricultural produce, such as soybeans, corn, rapeseed, sugar, coffee and rubber,” Bloomberg Intelligence’s Alvin Tai said.
The 2010-11 La Nina brought Australia’s wettest two-year period on record, the Australian Bureau of Meteorology said, and with it a strong 2011-2012 winter wheat crop.
This season, the crop could climb 78 percent year-on-year to 24.5 million tonnes, the US Department of Agriculture’s Foreign Agricultural Service said in July.
“A wet spring will support pasture development and grain fill for the winter crop,” Rabobank said in its agribusiness report for this month.
“However, if wet conditions continue into harvest, it can reduce crop quality,” it added.
A late-season La Nina is unlikely to have any impact on the winter crop in Australia, forecaster Abares said in its June outlook.
La Nina might also exacerbate a bout of dryness in Argentina, jeopardizing what was supposed to be a record wheat crop in one of the world’s top exporters.
Soy growers in the US might escape damage, with harvests typically complete by November. Brazilian soy could be more at risk “if drought and high temperatures weaken conditions for planting, which stretches from mid-August to mid-December,” Tai said.
The US, Brazil and Argentina account for about 80 percent of soybean production and smaller harvests can raise prices, Tai. said
In the 2011-2012 season, Brazil’s soy production declined 12 percent.
Additional rains in Southeast Asia could boost palm oil production, while the industry could also benefit from lower output of rival soy oil, Tai said.
There has already been more rain in Southeast Asia since June, particularly on Borneo, said Ling Ah Hong, director of plantation consultant Ganling Sdn.
La Nina’s impact on the palm crop would depend on how strong it is, Ling said.
“A weak to moderate La Nina is usually beneficial to palm production in the following year,” he said. “However, the heavy rains, if any, may cause immediate short-term disruption to harvesting and crop quality.”
La Nina and El Nino events can lead to steep differences in coffee prices. During the last big La Nina, arabica prices surged as much as 127 percent between 2010 and 2012, while robusta gained as much as 105 percent.
La Nina tends to bring adverse above-average rains to many parts of Colombia, and its effect might start to show up from next month to December, said Roberto Velez, chief executive office of Colombia’s National Federation of Coffee Growers.
While that could benefit areas that traditionally get less rain, the darker days caused by excess clouds reduce the luminosity necessary for flowering to occur, eroding overall yield potential.
Gold for December delivery on Friday fell US$16.40 to US$1,947.90 an ounce. Silver for December delivery fell US$0.43 to US$26.86 an ounce.
Additional reporting by AP
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