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El Ninos have been known to influence commodity prices

A commodity expert says history shows an El Nino can have a positive impact on prices.

The weather event occurs when there is abnormally warm surface water in the Pacific Ocean, and has been known to cause extreme weather conditions like too much or not enough moisture.

Erik Norland, senior economist at the CME Group, tells Brownfield El Nino’s have influenced trade in the past…

 

“On average over the past 11 El Nino’s that have occurred between 1959 and 2009, El Nino’s tended to push up the prices of most agricultural goods.”

Corn prices on average rose about 13 percent, wheat around 8 percent, soybeans and soy products 17 percent and Norland says even dairy prices rose about 20 percent during an El Nino.

However, he points out that around the averages is a wide price disparity.

“You have some El Nino’s, like the one in 1972, or even the most recent one in 2009, when you saw much larger price increases.  And there are other ones, like the (El Nino) in 1997; it was the strongest one on record where you actually saw prices fall.”

Norland says the current global economic climate has some similarities to 1997.

“so it’s possible that if the dollar remains very strong, and the prices of other commodities like crude oil or industrial metals continue to decline, that even if we have a strong El Nino it might not push agricultural prices up from a U.S. dollar perspective.”

He says the National Weather Service is reporting a distinct possibility that a strong El Nino could develop later this fall.