Commodities & Metals

Chances Rising for Summer Droughts

El Nino pattern
Source: U.S. National Oceanic and Atmospheric Administration
The chance that an El Niño weather pattern will form in the Northern Hemisphere this summer has risen to 65%, according to forecasters at the National Weather Service’s Climate Prediction Center (CPC). In April the CPC had estimated the chance for an El Niño in the Northern Hemisphere at 50%.

El Niño typically means a warmer, drier winter in the northern half of the United States, while the southern half of the country can look forward to a milder hurricane season and above average rainfall. Hotter, drier weather could have a serious impact on crops, while wetter weather in the south could ease drought conditions in many states.

The full impacts are wider however. In South America the effects mean hotter and drier weather in parts of the Amazon basin, Colombia and Central America. Southern Brazil may get wetter than normal weather. The impact on crops like coffee, sugar and corn can be significant.

In the United States, corn, wheat and other crops are threatened by lack of rainfall from the El Niño pattern, adding to uncertainty about production and ultimately commodity prices.

It is too early to panic, but not too early to start paying attention according to the CPC:

There remains uncertainty as to exactly when El Niño will develop and an even greater uncertainty as to how strong it may become. This uncertainty is related to the inherently lower forecast skill of the models for forecasts made in the spring.

The El Niño pattern begins to form in June and is fully formed by December. The good news is that unlike the La Niña pattern, El Niño typically lasts just one year instead of two or three.

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