By Niamh Michail
Related topics: Chocolate and confectionery ingredients, Fats & oils, Fruit, vegetable, nut ingredients, Market Trends, Confectionery
El Niño 2015 is underway and set to hit wheat, coffee and sugar cane production leading to volatile prices, warns a Rabobank report.
With buffer stocks for these commodities at ‘comfortable levels’, some of the impact of a particularly strong El Niño would be buffered but not completely shielded from fundamental and speculative influences.
This also held for soy oil and palm oil, the report said.
While 'meaningful' climate disruptions had yet to be observed, Rabobank warned that key drivers of the phenomenon – such as a rise in sea surface temperatures – would intensify from September to November. The National Oceanic and Atmospheric Administration (NOAA) has predicted a strong event for 2015.
Australian wheat production accounting for 12% of global wheat exports was one of the most atrisk commodities identified in the report.
Dry and warm conditions meant that production typically declined by one quarter during El Niño years.
“A significant contraction in Australian wheat in 2015/2016 would require additional Northern Hemisphere wheat to substitute importers’ demand. It would also limit the availability of highprotein wheat, which is in tighter supply than the ‘all wheat’ category at an international level,” the report said.
Meanwhile drier conditions would disrupt supplies of Robusta coffee in Indonesia, where a lack of artificial irrigation meant farmers were dependant on rainfall. Rabobank predicted a 15% drop in production to 10.5 m bags in 2016/2017 due to rain shortages. Coffee supplies in Vietnam, on the other hand, were less at risk because irrigation systems were more widely used. The report predicted that only a sustained drop in rainfall over more than several weeks would impact production – and this was unlikely.
For raw cane sugar – particularly vulnerable to El Niño which sweeps across leading sugar cane exporting countries price volatility could be expected, but this would be dampened by record large world sugar stocks for 2015/2016, the report said. Brazilian production was limited by a declining sugar cane crushing capacity, a challenge that was compounded by harvest delays due to wet weather and a diluted ATR (sugar content per tonne of cane). 6/29/2015
El Niño set to disrupt key commodities in 2015 http://www.foodnavigator.com/content/view/print/1135827 2/2
El Niño has so far lessened the monsoon rains and associated cane production, but reservoir levels were adequate to provide enough water for farmers. However, the report warned that a severe El Niño could curb plantings the following season.
Production opportunities El Niño would also create production opportunities for growers of Arabica coffee by creating warmer conditions over the Brazilian coffee belt, reducing the risk of frost, while the wet conditions across Brazil this year would probably lead to increased sugar cane yields next year.
Argentinian and Brazilian producers of corn and soybeans could also experience a boost in yields following wetterthannormal conditions and the reduced risk of drought. Argentinian yields increase by an average of 7% during El Niño.
The El Niño phenomenon refers to the warming of the central Pacific Ocean’s surface water which occurs every four to 12 years and causes unusual weather conditions across the globe, such as heavy rains to western South America and drought to eastern Australia and Indonesia.
According to the NOAA an El Niño episode can last nine to twelve months but some prolonged events may last for years.
The full report can be read here :