Wheat prices could pick up if the El Nino phenomenon spotted by Australian and American scientists has a big impact, says Canadian Wheat Board weather watcher Bruce Burnett.
“There are early signs of an El Nino starting now,” said Burnett about the weather phenomenon, which begins with water in one part of the Pacific Ocean becoming warmer than usual, which can interrupt normal weather thousands of kilometres away. Meteorological analysts in the United States and Australia have both announced that they believe an El Nino may be developing.
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“They’re seeing some of the signs in particular parameters they follow that indicate that we will probably be in an El Nino here within a few months,” said Burnett.
For Canada’s West, an El Nino usually means slightly warmer and drier weather on the western Prairies. The eastern Prairies are rarely affected. Western American states tend to see the same warming and dry conditions.
That’s raising alarm in Montana, where producers want a wet winter to recharge parched soils. Dry conditions in U.S. farm states during the winter often help generate late winter rallies, when markets get fearful about winter wheat and spring seeding conditions.
But El Nino’s most dramatic effects are in the southern hemisphere.
“The influence is mostly where (El Nino) is, in its backyard,” said Burnett.
Argentine and Australian crops are growing now. Argentine wheat is already under stress. The Buenos Aires Grain Exchange this week estimated that 55 percent of Argentina’s wheat was in good to very good condition, 30 percent poor and 15 percent in average shape.
Dry weather forced the Australian government last week to slash its winter crop forecasts by more than a third, with the wheat crop likely to fall 35 percent from last year.
More spring rain is needed to secure summer crops.
A strengthening El Nino would hit those crops in the crucial filling stages.
“It’s bad news for Australia,” said Burnett.
Australia and Argentina are key competitors to Canada, so anything that reduces export wheat production there means good financial news for prairie farmers.
El Nino’s effects are also seen in other southern countries. In southeastern Asia it can cause drought and the Indian monsoon can be reduced.
In North America, the phenomenon usually warms only the western side of the continent, and often the eastern Prairies experience average weather. Burnett said the dividing line often comes down somewhere in eastern Saskatchewan or Manitoba.
While the El Nino forecast has drawn much comment, Burnett said it is too early to predict impacts. Sometimes it doesn’t mean much at all.
“It’s somewhat tenuous, but there is a relationship,” said Burnett.
“It’s like weather forecasting,” he said with a laugh.
