El Niño Outlook
             and
Potential Commodity Impacts
        for 2009-2010



          June 2009
El Niño Outlook and Potential Commodity
                 Impacts for 2009/10

There are several indications in the Pacific...
This overview summarise some the most common weather and commodity production
anomalies which have occurred during prior e...
Dairy

        Europe
        – Jun-Sept 2009 – no consistent impacts, but extreme weather events not
        uncommon dur...
Cocoa

        Ivory Coast
        – Jul-Aug 2009 – rainfall for main crop development sometimes impacted by cool
        ...
Oils

       India
       – Jun-Sep 2009 – monsoon failure in NW India reduces peanut/soy production


       Indonesia
  ...
Grains

     Australia
         – Apr-Jun 2009 – reduced rainfall in SE Australia for wheat plantings


     India
       ...
FURTHER INFORMATION
For further information about this proposal please contact:

Richard Field, Director, Orrani Consultin...
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Orrani Consulting El Niño Outlook And Potential Commodity Impacts For 2009 2010

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A view of some potential effects of El Niño on global supply of agricultural commodities.Cocoa in West Africa looks like it is doing well and the main crop should escape negative impacts since the Atlantic is in a favourable state. India and Australia are the primary drought concern. Floods in southern China are not inconsistent with this developing pattern,

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Transcript of "Orrani Consulting El Niño Outlook And Potential Commodity Impacts For 2009 2010"

  1. 1. El Niño Outlook and Potential Commodity Impacts for 2009-2010 June 2009
  2. 2. El Niño Outlook and Potential Commodity Impacts for 2009/10 There are several indications in the Pacific Ocean that an El Niño pattern is in the process of developing. Resulting changes in weather patterns from an El Niño are likely to have global impacts on agricultural growing seasons during the next 6 to 18 months. Originally a term for a local warming of the ocean near the coast of Peru in South America, El Niño now refers to a sustained warming of +0.5C (for ~ 3 to 5 months) over a large part of the central and eastern tropical Pacific Ocean. The last El Niño ran from September 2006 until February 2007. Current Ocean Temperature Anomalies – Equatorial Pacific Ocean Positive ocean temperatures above +1 degree C indicate El Niño. El Niño’s typically start during the northern hemisphere spring or autumn. This year shows signs of spring development. As of late May 2009, 5 out of 7 of the largest government Meteorology Bureaux are forecasting El Niño development in 2009, extending into 2010. Potential Commodity Impacts of El Niño Developing in 2009 El Niño events occur about every 4 - 7 years. While each El Niño event is unique in terms of its strength and impact on weather patterns, there are well documented rainfall and temperature patterns that are common between events. It is important to note that climate conditions in the Atlantic and Indian Oceans also play an important role in determining final outcomes. 1
  3. 3. This overview summarise some the most common weather and commodity production anomalies which have occurred during prior events. The potential El Niño commodity impacts have been placed on the 2009/10 calendar to provide a sense of timing Please note, these are NOT forecasts! This document is a snapshot for June 2009, produced before July and August – when most of the impacts on commodities begin. Sugar India – Jun-Sep 2009 – monsoon failure in northern and western cane areas can reduce production Brazil – Jul-Sep 2009 and 2010 – warm in year 1 favourable for Brazil sugarcane yield in year 2 Australia – Jan-Mar 2010 – drought conditions, if severe enough can negatively impact sugar cane production Thailand – Jan-Mar 2010 – winter drought can impact cane production in the most severe cases Sugar - Potential El Niño Impacts 9 0 9 9 0 09 9 9 9 10 0 10 9 -0 09 -1 -0 -0 -1 -0 -0 0 -1 -0 p- b- n- n- ay ay ov ug ar l- ec pr pr ct Se Fe Ju Ju Ja M M M O N D A A A Development hindered - India Given Monsoon Failure Final Yield Favored - Warm Brazil SC Sunny Development hindered - Australia Given Severe Drought Development hindered - Thailand Given Severe Drought 2
  4. 4. Dairy Europe – Jun-Sept 2009 – no consistent impacts, but extreme weather events not uncommon during summer milk production season Australia – Nov-Apr 2009-10 – hot, dry conditions reducing feed and grazing NZ – Nov-Apr 2009-10 – drought conditions negatively impacting eastern side of grazing lands US – Jan-Mar 2010 – CA storms rain and flooding can reduce milk production Dairy - Potential El Niño Impacts 9 0 9 9 0 09 9 0 9 09 0 9 0 9 -0 -1 0 -0 -0 -1 -0 1 -1 -1 -0 0 g- p- b- n- ay ay ov ar l- ec pr pr n ct u Se Fe Ju Ju Ja M M M O N D A A A Milk Production - Few Europe Consistent Impacts NSW Milk Production Australia Decline - Drought E. Side Production New Zealand Decline - Drought CA Milk Production United States Decline - Rain/Flood 3
  5. 5. Cocoa Ivory Coast – Jul-Aug 2009 – rainfall for main crop development sometimes impacted by cool dry weather Ivory Coast/Ghana – Dec-Mar 2010 – hot dry weather reduces mid crop setting Indonesia – Jul- Aug 2009 – drought negatively impacts setting for second crop Ecuador – Feb-Mar 2010 – heavy rains, flooding can significantly reduce production Cocoa - Potential El Niño Impacts 9 0 09 9 0 9 9 0 9 9 0 9 10 09 -0 -1 0 0 -0 -1 -0 -0 -1 -1 -0 g- v- p- n- ay ay ar l- ec b pr pr n ct o u Se Fe Ju Ju Ja M M M O N D A A A Main Crop Decline - Ivory Coast Cool/Dry Mid Crop, Poor Set - CDI/Ghana Hot/Dry Mid Crop, Poor Set - Indonesia Drought Main Crop Decline - Ecuador Floods, High Humidity 4
  6. 6. Oils India – Jun-Sep 2009 – monsoon failure in NW India reduces peanut/soy production Indonesia – Oct-Dec 2009 – drought reducing palm oil (and PKO) flowering impacting production in 6-8 months Brazil – Nov-Mar 2009-10 – good rains in SE Brazil increase soy yields Philippines – Nov-May 2009-10 – potential drought in coconut areas Oils - Potential El Niño Impacts 9 0 09 9 9 9 0 10 09 9 10 9 0 9 -0 -1 -0 -0 -1 -0 -0 -1 -0 -0 g- b- r- r- ay ay ov ar ec ep n n ct l u p p Fe Ju Ju Ja M M M O N D A A A S Peanut Yield Decline - India Monsoon Failure Palm Oil Flowering Indonesia Decline - Drought Soybeans Yields Improve - Brazil Good Rains Coconut Production Philipines Decline - Drought 5
  7. 7. Grains Australia – Apr-Jun 2009 – reduced rainfall in SE Australia for wheat plantings India – Jun-Sep 2009 – monsoon failure country wide can reduce rice and wheat crops South Africa – Nov-May 2009-10 – drought can reduce the maize crop Indonesia – Jan-Jun 2010 – drought impacting Java Rice Grains - Potential El Niño Impacts 9 0 9 9 09 9 0 0 9 09 10 9 0 9 -0 -1 0 -0 -0 -1 0 1 -1 -0 -0 g- p- b- r- n- r- ay ay ov ar ec n ct l u p p Se Fe Ju Ju Ja M M M O N D A A A Wheat Area Decline - Australia Drought Rice Yield Decline - India Drought Corn Yield Decline - South Africa Drought Java Rice Yield Decline - Indonesia Drought 6
  8. 8. FURTHER INFORMATION For further information about this proposal please contact: Richard Field, Director, Orrani Consulting Bath, UK Tel: +44 (0)7850-594851 E-mail: richard.field@orrani.com ABOUT ORRANI CONSULTING Orrani Consulting is a leading consultancy specialising in the global agribusiness industry, in which it offers unsurpassed international project experience. The business was established in 1993 as a division of the leading European agribusiness development consultancy. Building on its success the business emerged as an independent company in 2003, re-branding to Orrani Consulting from iRIS Consulting in October 2008. Projects are typically implemented throughout the Americas, Europe, Asia, Oceania and Africa/Middle East. Orrani Consulting’s work comprises mainly confidential assignments for businesses and industry organisations based in the US, Europe and Oceania and developing strategies for international business development and procurement. Client testimonials are provided at www.orrani.com Senior associate consultant Richard Larsen has worked in the agricultural commodity and meteorological forecasting for over 25 years. He started his career as an aviation forecaster for Federal Express. With academic backgrounds in both meteorology and agronomy, commodity markets were a natural fit and he joined M&M Mars in 1984 as a commodity researcher. He retired from his position as Commodity Research Director at Mars in 2007. During his long career at Mars he forecast the fundamentals of all food commodities, from soybeans to carrageenan, from cocoa to dairy. ORRANI CONSULTING (INTERNATIONAL) LTD www.orrani.com US Representative Office UK Head Office 373 Bayberry Way 12 Lower Camden Place, Charlottesville Bath VA 22911, USA BA1 5JJ, United Kingdom Tel: +1 (434) 242 7812 Tel: +44 (0) 1225 318 222 Fax: +1 (866) 862 2395 Fax: +44 (0) 1225 430 240 7

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