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News and analysis on the global poultry
and animal feed industries.
Broilers & Layers
on April 21, 2014

Uncertainty in commodity markets developing along with El Niño

Potential return of El Niño weather pattern means agriculture markets can be significantly affected

As researchers keep an eye on a large pool of unusually warm water in the Pacific Ocean, the prospects seem high for an El Niño weather pattern returning. And if El Niño returns, commodity markets will be significantly disrupted, according to private agribusiness consultant Ken Shwedel.

Occurring every three to seven years, El Niño is a buildup of unusually warm surface waters in the central and eastern equatorial Pacific Ocean that leads to global changes in temperature, wind patterns and precipitation. That has the potential of playing havoc with world agricultural production.

According to Shwedel, El Niño tends to cause drought-like effects in Australia, impacting the Australian and world beef markets. In other parts of the world, such as Peru, it tends to create flooding, which will have a harsh effect on feed crops. Shwedel also indicated there are prospects of increased precipitation in the United States. All of those factors are expected to subsequently impact world feed, pig and poultry markets.

El Niño projections differ among agencies, as the U.S. National Oceanic and Atmospheric Administration (NOAA) has said there is a 50 percent chance of an El Niño phenomenon in 2014, while the Australian Bureau of Meteorology is calling for the chances to be more than 70 percent.

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