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As an adjunct to Stig's post about El Nino, I want to toss in another bit
about the hurricane season for some comment from the petroleum traders in
the group. NOAA and the others who watch hurricane activity seem to think
this will be a very active hurricane season, judging from early activity off
the African coast. Although El Nino tends to produce and/or accompany high
pressure systems on land in the southern US which tend to rebuff hurricanes
from coming ashore, it seems to me there still could be plenty of hurricane
activity in the Gulf. If so, the natural gas producing platforms in the
Gulf and their transmission pipelines to land may be disrupted, as they
often are in hurricanes. When they are, NG prices tend to shoot up during
the actual or perceived short term disruption in supply. Any comments from
NG traders who know a whole lot more about this than I do? It could be an
interesting weather season.
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Date: Wed, 2 Jul 1997 01:56:50 +0200
From: "Stig Olausson" <olausson@xxxxxxxxxxxxx>
To: <realtraders@xxxxxxxxxxxxxxxxxxx>,
"RealTraders Discussion Group" <realtraders@xxxxxxxxxxxxxx>
Subject: More el Nino
Below you will find an article published in Financial Times on June 30
regards
Stig
Climate disruption caused by the warming of the Pacific ocean, known as El
Niño, is threatening to drive prices of agricultural commodities sharply
higher in the next few months.
Scientists fear that the effects of El Niño could be the worst for 50
years, producing droughts in some countries and floods in others.
"We are seeing a major El Niño development in the central Pacific region
and we are certain that it will be as big as anything in the last 50 years.
The only thing we are not sure about is if it will be the biggest, or
simply one of the top three of the past five decades," said Mr Ants
Leetmaa, director of the Climate Prediction Centre for the National Weather
Service, part of the US National Oceanic and Atmospheric Administration.
The economic consequences for nations that depend on production and export
of essential commodities such as sugar, cocoa, coffee and tea, could be
enormous, according to Mr Leetmaa and other US scientists monitoring
climate change.
The last severe El Niño effect occurred in 1982-83. It was responsible for
billions of dollars worth of damage to crops around the world, livestock
and property in the US, Latin America, the Far East and Africa. South
Africa was reduced from a significant regional grain producer to an
importer of 1.5m tonnes of corn.
El Niño is the term for an abnormal state of the ocean-atmosphere system in
the tropical Pacific, carrying serious implications for global weather
systems. El Niño, which in Spanish means the Christ child, acquired its
name because its full impact generally coincides with Christmas.
The NOAA's forecast for this year's El Niño says the consequences will be
"increased rainfall across the southern tier of the US and in Peru,
sometimes resulting in destructive flooding; and drought in north-east
Brazil, south-eastern Africa, and the west Pacific".
Many of these areas are producers of sugar, leading commodity analysts to
predict that sugar crops could decline by as much as 20 per cent next year.
Thailand's Cane Sugar Board has forecast a fall of between 10 per cent and
15 per cent in the country's sugar production to 5m tonnes this year,
because of drought.
Kenya's tea crop is down by at least 20 per cent as a result of drought,
which has also affected Jamaican agriculture. Australia has forecast that
drought will cut the value of its agricultural exports by 5 per cent in
1997-98.
El Niño's heavy rains can be just as devastating. Mr José Carval, president
of Ecuador's National Cocoa Exporters Association, said: "If this El Niño
current phenomenon continues, producing heavy rains, then damage to the
Christmas crop is expected." Peru has declared a state of emergency in nine
of its 24 regions, in preparation for El Niño-related disasters expected
this year.
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