El Nino may hammer Asian farms with dry weather, but shower American growers

SINGAPORE, June 1 (Reuters) - Early signs of hot, dry weather caused by El Nino are threatening food producers across Asia, while American growers are counting on heavier summer rains from the weather phenomenon to alleviate the impact of severe drought.

El Nino, a warming of water surface temperatures in the eastern and central Pacific Ocean, is expected to develop in the coming months, according to meteorologists. The impact of the phenomenon typically causes hot, dry weather across Asia and Australia while bringing heavier-than-normal rainfall to the southern U.S. and southern South America.

As El Nino looms, wheat output in Australia, the world's second-largest exporter of the grain, is expected to take a hit from dry weather, while palm oil and rice production is likely to suffer in Indonesia, Malaysia and Thailand, forecasters and analysts said.

Soil is drying in India and Pakistan, which is expected to hamper summer crop planting, while El Nino is also forecast to blunt the impact of South Asia's crucial June-September monsoon season.

"We are looking at longer term dryness in Australia from now until at least August," said Chris Hyde, a meteorologist at U.S.-based Maxar. "The seasonal outlook in India is a weaker than normal monsoon for the entire country, extending into Pakistan."

Lower production of cereals and oilseeds in Asia because of El Nino is likely to heighten food inflation worries for some of the world's most vulnerable consumers, dashing hopes for further relief from lower prices in recent months. Even if the weather pattern ends up boosting crop output in the Americas, the impact in Asia could reverberate across global food markets.

Wheat prices dropped to two-and-half year lows this week, while corn and soybeans have eased from multi-year peaks set in 2022, when the Russia-Ukraine war and COVID-19 disrupted world supplies.

Australia, which has produced bumper wheat crops for three years, had a good start to the 2023/24 planting season with ample soil moisture but is forecast to see below-normal rains and higher temperatures during the crucial southern hemisphere winter months.

For Indonesia and Malaysia, which supply 80% of the world's palm oil, dryness in the second half of 2023 could hit 2024 yields.

"Concerns around dry weather have heightened as compared with the situation a month ago. The outlook suggests El Nino is developing," said Phin Ziebell, an agribusiness economist at National Australia Bank, noting that Western Australia, New South Wales and Queensland have had little rain.

The onset of monsoon rains across South Asia is likely to be slightly delayed this year and El Nino could hit rice and oilseeds production.

"El Nino could develop during July ... it might have an impact in the second half of the season," said O.P. Sreejith, a senior scientist with India Meteorological Department.

However, Sreejith said India could get lucky with a weak El Nino as higher sea-surface temperatures in the Indian Ocean and southwesterly winds could bring more rains.

In the United States and Argentina, where drought has reduced wheat and soybean crops this year, ample rains forecast in the second half would benefit crops, although overall output will depend on the timing of El Nino.

"Having an El Nino now in winter doesn't mean that the atmosphere is going to react automatically and that it's going to start to rain," said Germán Heinzenknecht, meteorologist at Applied Climatology Consultancy in Argentina.

"In general, a big part of the Pampean region and Northern Argentina have above-normal rains with the El Nino phenomenon."

Meteorologists are divided on how fast the transition to El Nino from the current La Nina, a pattern when Pacific Ocean waters turn colder than normal, will impact U.S. weather, but the shift should be complete during the key development stage for corn and soybeans.

"I think the growing conditions are going to be pretty good," said David Tolleris, president of forecasting service WxRisk.

Rains are likely to help recharge depleted soil moisture in the U.S. Plains and set the stage for a much-improved winter wheat harvest in 2024, according to weather forecasters.

The weather is forecast to be benign for much of China during the crucial corn, soybean and rice producing months, although there are likely to be pockets of dryness.

In Europe, where El Nino is not typically linked to pronounced weather patterns, major crops are in good shape after abundant spring rain, with the exception of drought-hit Spain.

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