El Nino has emerged, Asia braces for crop damage

In 2009, the El Nino brought the worst drought in four decades to India. It razed wheat fields in Australia and damaged crops across Asia. Food prices surged. A closely watched forecast by Japan on Tuesday confirmed its return this year.

A strong El Nino will roil economies that are heavily dependent on agriculture, particularly India which is already reeling from bad weather. It would also unhinge supply chains of commodities such as rice, corn and palm oil. In fact, the heat is already up in some places in the Asia Pacific.

“We’ve already been hit by a three-month dry spell. We could not plant anything since January. All of us here in Taculen are praying for more rains,” said Benny Ramos, a rice farmer in North Cotabato in southern Philippines.

Prayers for rains in Asia, however, may not be answered as weather forecasts show an intensifying El Nino has set in.

The El Nino, or a warming of sea-surface temperatures in the Pacific, can lead to scorching weather across Asia and east Africa but heavy rains and floods in South America.

This year, the El Nino arrived in spring and is likely to continue into autumn, said the Japan Meteorological Agency, which was the first bureau to project the emergence of an El Nino in 2015.

Forecasts in May tend to be more accurate as weather models become more dependable here onwards, said Paul Deane, senior agricultural economist at ANZ Bank, Melbourne.

“Now we are getting to a point that you start having more confidence in those models,” he said.

Grain prices have, however, not yet factored in the threat to supplies from an El Nino, largely because similar calls for bad weather in 2014 did not come to pass. In fact, good crops replenished stocks last year.

In the absence of a weather premium, prices of grains such as wheat and rice remain near multi-month lows. Wheat futures Wc1, down a fifth so far this year, are near five-year lows, while Asia rice RI-THBKN5-P1 is at its weakest since June.

The last El Nino led to tens of billions of dollars in economic damages in the Asia Pacific. This year, a strong El Nino could take an even bigger toll in certain countries, analysts said.

For India, it would be a double whammy.

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