Drought linked to the weather pattern will cut Thailand’s main rice harvest to the lowest in nine years.
Soybeans sown in the past two weeks in India may be pulled out of the ground without immediate rain, and the outlook is cloudy for Asian palm oil. Australia’s wheat crop may decline.
El Nino risks disrupting harvests worldwide by reducing rainfall in Australia and altering patterns across South America as well as baking parts of Asia.
Central Thailand is the driest in more than 20 years and India’s monsoon is heading for the first back-to-back shortfall in three decades. The inflation- boosting effect of the first El Nino since 2010 also poses a risk to the global economy, Citigroup Inc. says.
“A price spike could be caused by strengthening of El Nino and worsening of rainfall,” said Wayne Gordon, an analyst at UBS Group AG in Singapore, referring to food costs. Weather patterns in the next two months are critical, he said.
El Nino is set to last until 2016 and some data patterns are similar to the record 1997-98 event, according to weather forecasters in Australia and the US The event is a risk for grains in Asia and Central America and global rice output will be less than previously forecast, the United Nations predicts.
Smaller crops in Asia may help arrest the decline in world food prices that last month reached an almost six-year low amid ample global supply, according to a UN index. Rice, the staple for half the world, sank to the lowest since 2006 in May. Wheat fell to an almost five-year trough the same month.
News by Bloomberg, edited by ESM
