Unusually dry weather throughout August has dealt a blow to cereal and oilseed crops in Asia, worsened by the escalation of the El Nino weather phenomenon. As forecasts for continued low rainfall in September emerge, concerns are growing over potential supply disruptions in key agricultural markets.
The impact of this weather pattern has been felt across various segments of the agricultural industry, particularly in countries heavily reliant on crop production. In Australia, the world’s second-largest exporter of wheat, dry conditions have led to downward revisions in wheat output forecasts. Insufficient monsoon rains in India, the world’s largest shipper of rice, are projected to lower crop yields. Southeast Asia is also grappling with insufficient rains that could affect supplies of palm oil, a staple in the global vegetable oil market.
“In several parts of the world, we are experiencing full-blown El Nino weather, and this trend is expected to intensify towards the end of the year,” explained Chris Hyde, a meteorologist at Maxar Technologies, a U.S.-based climate data analytics platform. Hyde highlighted the correlation between this weather pattern and dry El Nino conditions in Asia.
El Nino, characterized by Pacific water warming, typically leads to drier conditions in Asia and increased rainfall in parts of the Americas.
Impact on India and Australia
In India, where the monsoon rains are crucial for summer crops, the current year is poised to witness the weakest monsoon in eight years. Senior officials from the India Meteorological Department expressed their concern over the unexpected severity of El Nino’s impact, stating that this August will end with a deficit of over 30%, marking it as the driest August on record. India’s role as a significant contributor to global rice exports has been affected, leading to heightened rice prices, which recently reached 15-year highs.
Australia, which has been a consistent supplier of wheat, is also facing challenges as wheat output estimates are being revised downwards for the first time in four years. Insufficient rainfall in key growing areas during August has prompted analysts to predict a reduction of three million metric tons from the initial estimate of 33 million tons. The potential continuation of dryness in September could further decrease the wheat crop.
Southeast Asia and Beyond
Tropical Southeast Asia, including countries such as Indonesia and Thailand, has experienced lower-than-usual rainfall affecting crops such as rice, palm oil, sugarcane, and coffee. Eastern parts of Indonesia and much of Thailand have seen minimal rain in the past month, with precipitation levels hovering around 50% to 70% of the average. The coming month is anticipated to continue the trend of below-normal rainfall, raising concerns for crop yields.
While the current weather challenges are not linked to El Nino, Drew Lerner, President of World Weather Inc., noted that the United States has also witnessed negative effects on corn and soybean crops due to dryness. However, the forecast suggests that from November to February, El Nino-related precipitation will positively impact southern states, benefiting winter wheat cultivation.
As the global agricultural landscape grapples with the effects of El Nino, uncertainty prevails in various crop markets. The outlook for South American weather is relatively optimistic, indicating favorable conditions for the early 2024 harvest of soybeans and corn.