La Ni帽a: ‘Supply Side Wild Card’ for Ag
La Ni帽a, a natural weather phenomenon known as the cool sister of the higher-profile El Ni帽o, is shaking up agriculture in an already-tumultuous year.
The pattern is characterized by cooler-than-normal waters in the Pacific Ocean, causing dry weather in some parts of the globe and heavy rainfall in others. It is about an every-third-year occurrence.
La Ni帽as have in the past created significant market volatility and raised food prices, and the current edition is already pushing up prices of crops such as corn and reducing supplies of pineapples and mangos. This event has the potential to last until the Northern Hemisphere spring, according to government forecasters in the U.S., Japan and Australia.
So far, dry conditions have been reported in Brazil, Argentina, and parts of the U.S., as well as bouts of excessive rain in Australia and parts of Southeast Asia.
鈥淟a Ni帽a 2020 has evolved quicker and with stronger intensity than many leading climate models predicted,鈥 analysts from J.P. Morgan said, calling the phenomenon the 鈥減rimary supply-side wild card鈥 for agricultural markets going into 2021.
Prices of some U.S. crops have climbed this year, in part due to increased demand from China and a pandemic fueled baking craze. Futures prices for soybeans, corn and hard red winter wheat have risen by as much as a third since Aug. 10.
Source: Wall Street Journal