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,

1. El Niño Outlook
and
Potential Commodity Impacts
for 2009-2010
June 2009

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.
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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
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0
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9
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-0
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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
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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
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0
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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
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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
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0
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9
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-0
-1
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0
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g-
v-
p-
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o
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Ju
Ju
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M
M
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A
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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
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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
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09
9
9
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0
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09
9
10
9
0
9
-0
-1
-0
-0
-1
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g-
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p
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Ju
Ju
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M
M
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A
A
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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. 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
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0
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Ju
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M
M
M
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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
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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
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