GLOBAL - Once more there is an increased risk that an El Niño weather phenomenon may occur according to weather forecasters.
Last week the US Climate Prediction Centre reported the possibility of El Niño occurring by summer 2015 had reached 70 per cent and yesterday the Australian Bureau of Meteorology followed suit.
The phenomenon typically brings drier weather to South East Asia (main palm oil production area) and Australia, and can cause severe drought. The impacts vary depending on the time of year El Niño develops and in its strength – read more in MI Prospects.
The bottom line is if an El Niño weather develops, it could impact palm oil and Australian crop production, and thus, potentially add some support to both grain and oilseed prices.
However, the occurrence of an El Niño in 2015 is far from certain. Twelve months ago, a similar level of probability was reported, but the phenomenon never fully developed.
Nonetheless, the possibility of El Niño is once more a watch factor for markets in the months ahead.
TheCropSite News Desk