Weak El Nino May Reduce Rainfall in Eastern Indonesia, BMKG Says

By webadmin on 07:44 pm Aug 10, 2012
Category Archive

A normal to weak El Nino weather pattern in Indonesia will persist until the end of the year and will potentially reduce rainfall in the eastern parts of the country, the nation’s Meteorology, Geophysics and Climatology Agency said in a statement in Jakarta today.    

Most parts of Indonesia, including much of Borneo island, are forecast to experience a normal rainy season starting in October, the state weather office known as BMKG said, though it’s far from clear what impact this will have on the country’s crops and agricultural economy.

But as the warm water oceanic currents that define El Nino shift across the Globe, weather patterns can very dramatically, wreaking havoc with either too much rain, or not nearly enough. 

The weather phenomenon can bring drought and floods to parts of the world, and could trigger widespread disruption in global food supplies, raising alarm over a possible repeat of a 2008 food crisis.  

El Nino can cause above average rains in northern Peru and Bolivia, drought in Southeast Asia, Australia, India and northeast Brazil, cyclones in the central Pacific and stormy weather in the southern and western United States.
 
The worst El Nino on record in 1997-8 killed more than 2,000 people and caused property damage estimated at $33 billion.    

Here are some of the important commodities affected by the weather pattern.

Grains and oilseeds

Global corn prices have surged more than 60 percent in the last two months to all time highs as the United States reels from the worst drought in 56 years, which has wilted crops.

A mix of high oil prices, growing use of biofuels, bad weather, soaring grain futures markets and restrictive export policies pushed up prices of food in 2007-08, sparking violent protests in countries including Egypt, Cameroon and Haiti.

UN Food and Agriculture Organization’s Food Price Index, which measures monthly price changes for a basket of cereals, oilseeds, dairy, meat and sugar, averaged 213 points in July, up 6 percent from 201 points in June.

Additional corn purchases by China, the world’s second-largest consumer, could spur more rallies in global prices. China’s corn imports are likely to jump almost 60 percent in the year to Sept. 2013 because of steady growth in the livestock and industrial sector.    

But China’s autumn grains, which include corn and soybean, may benefit from hot weather associated with the El Nino, according to a senior meteorology official.    

Despite initial fears of erratic weather, top rice exporter Thailand is forecast to produce 25.9 million tons of paddy in its main 2012-13 crop, more than an earlier estimate of 24 million tonnes after a government intervention price encouraged farmers to grow more.    

But after the aggressive intervention, the government is holding record high rice stocks of 15 million tons of paddy, equivalent to about 8 million tons of milled rice.

Average palm oil prices in Malaysia could be supported at 3,200 ringgit ($1,029 a ton) this year because of the El Nino, which typically brings dry weather to Southeast Asia and could crimp yields.   

Indonesia, the world’s main palm oil producer, has cut its output forecast by 8 percent to 23.6 million tons this year.  

India’s monsoon rains are likely to be deficient in 2012, signalling the first drought in three years as the El Nino should cut rains in the second half of the June-September season and threaten crops such as pulses, rice, soybeans, groundnuts.

In 2009, El Nino turned Indian monsoon rains patchy, leading to the worst drought in nearly four decades.         

Soft Commodities

Vietnam and Indonesia, the world’s top robusta producers, account for about a fifth of the world’s coffee crop. The weather in Vietnam has been favorable ahead of the next harvest in October.     

In Indonesia, the coffee harvest peaks in July, and a drop in the bean premiums against London futures 0 LRC: suggests the crop has recovered from bad weather. Heavy rain damaged the 2011 crop, causing a severe supply shortage that sent premiums to all-time highs of $550 to futures.      

In Brazil, the world’s largest coffee producer, the crop faces a smaller risk of frost this year due to the likelihood of an El Nino, which will bring higher-than-normal rain and moisture to the coffee belt. With higher humidity, comes a lower likelihood of frost.    

Poor rainfall in India’s top three cane producing states has hurt the sugar crop. In 2009, New York raw sugar futures rocketed to their highest in nearly 30 years after severe drought forced India to import about 2 million tons. India is the world’s top sugar consumer.    

Despite worries about an El Nino-induced dry spell, Thailand sees little disruption to cane output. The world’s second-largest sugar exporter could produce up to 10.3 million tons of sugar in the next crop. The 2011-12 crushing season ended in May, producing a record output of 10.2 million tons.

Indonesia, which accounts for about 10 percent of global cocoa output, is battling disease and adverse weather that have hampered cocoa supplies for years. But output is still forecast to rise 9 percent to 475,000 tons this year. 

Indonesia, the world’s second-largest rubber producer, expects output to slip by as much as 10 percent to about 2.65 million tons this year on dry weather.    

No weather anomaly has been reported in China but El Nino in 2009/2010 was blamed for a severe drought in southwestern provinces, the country’s largest sugar and coffee growing area, as well as floods in provinces along the Yangtze River, the major rice and cotton growing areas.         

Minerals

Coal output in Indonesia, the world’s top thermal coal exporter, could benefit from dry weather this year, but the country’s coal association has cut its exports forecast as a global oversupply puts pressure on the industry.

Bloomberg and Reuters