El Nino will likely begin as early as this July according to forecasts by Australia’s Bureau of Meteorology. All of the climate models used indicated that El Nino would occur this year and six of the seven models indicated that thresholds for the event will be exceeded by July. El Nino can cause serious drought in Asia while causing wetter-than-usual weather in parts of South America and the U.S. causing challenging farming conditions worldwide, with either too much rain or not enough. Palm oil, sugar and cocoa are the main commodities that El Nino tends to influence from a production standpoint. The last El Nino occurred in 2009-2010 and according to Goldman Sachs, a reoccurrence would boost risk to soft commodity price forecasts. Because of its effects in Asia, concern usually turns toward the rice market, however stockpiles and supplies are high and a decline in production wouldn’t be seen until early 2015.
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