Concerns about the effect of El Niño,
which have hit commodities markets since the start of the year, are
spreading to gold, as some analysts point to the weather phenomenon’s potential impact on India’s monsoon season.
The lack of physical buying by Indian consumers, normally active
purchasers of the yellow metal, has been one of the bearish factors for
the gold market this year. The precious metal was down 3 per cent on the
week at $1,253.90 a troy ounce, and Edel Tully, precious metals
strategist at UBS in London, said India was likely to be on the radar in
June as the monsoon season started.More
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India’s rural farming areas account for about 60 per cent of the country’s gold purchases, and the strength of the monsoons has a direct impact on gold demand. “A good monsoon season is positively correlated with agricultural crop yields, in turn farmers’ incomes and higher gold demand,” said Ms Tully.
A bad monsoon could hit crops and lead to higher food inflation, prompting higher income earners to buy gold. However, a larger impact on the gold market is likely to come from poor crops and rising food costs forcing farmers to “sell part of their gold holdings as well as leaving less money for gold purchases”, UBS added.
Elsewhere in commodities markets, El Niño could be supportive for US crops hence bearish for markets.
The weather phenomenon is associated with cooler and damper conditions in the US midwest, and could be good for grain and soyabean yields, said Chris Narayanan, analyst at Société Générale in New York.
El Niño tends to lead to dry weather in South America, and is expected to help keep Brazil’s export operations running, allowing the global trade pipeline for soyabeans to be supplied.
Meanwhile, the weather pattern is expected to lead to a reduced number of storms in the Atlantic, and analysts expected fewer hurricanes for the US season starting next month.
Steve Bowen, meteorologist at reinsurance brokers Aon Benfield said: “The consensus is that the 2014 Atlantic hurricane season should see a reduced number of storms, primarily due to the pending development of an El Niño in the eastern Pacific.”
Hurricanes and tropical storms in the Atlantic have influenced commodities markets from energy to orange juice, although the recent boom in onshore shale output has meant that the oil and gas markets have become less vulnerable to weather systems hitting the US Gulf coast.
However, Mr Bowen warned that it only takes one major landfalling storm to cause disruption. “The United States remains long overdue for such an event to happen again,” he said.
Food Prices and El Niño -- Will El Niño Develop This Year?
In recent months, both Australian and U.S. meteorological officials
have pointed out the possibility of an El Niño weather pattern setting
up in the Pacific Ocean. As we recently noted, El Niño is a pattern
which increases rainfall in certain parts of the globe and decreases it
in others. Meteorologists believe that there is a 65 percent probability
of El Niño developing by July 2014.
Historically, El Niño has had big effects on commodity prices -- primarily nickel, copper, and food prices. Nickel has already risen, because even before an El Niño event, Indonesia has curtailed shipments from its mines. Indonesia is the world’s largest producer, and much of its production is created using hydropower -- so an event could send nickel prices higher. As readers know, nickel is an important component of steel production. On the other hand, copper production could be impeded by an excess of rain in Chile’s mountains, making copper mining and transportation more difficult.
El Niño usually increases rains in California, eastern China, and the U.S. sunbelt, and decreases rains in India, northern Brazil, Indonesia and Australia.
Historically, El Niño has had big effects on commodity prices -- primarily nickel, copper, and food prices. Nickel has already risen, because even before an El Niño event, Indonesia has curtailed shipments from its mines. Indonesia is the world’s largest producer, and much of its production is created using hydropower -- so an event could send nickel prices higher. As readers know, nickel is an important component of steel production. On the other hand, copper production could be impeded by an excess of rain in Chile’s mountains, making copper mining and transportation more difficult.
El Niño usually increases rains in California, eastern China, and the U.S. sunbelt, and decreases rains in India, northern Brazil, Indonesia and Australia.
Food prices are less likely to be impacted by El Nino in 2014, with the
exception of coffee, cocoa and sugar. The country which is most
vulnerable to an El Niño event that affects its monsoon is India -- a
country very dependent upon subsistence agricultural and extremely
dependent upon its monsoon rains. If these were to be affected, India
could suffer from food inflation and possible shortages.
Outside of India, much of Asia has a strong surplus of rice and other
food grains and is less likely to be immediately affected.
Drought-impacted Brazilian coffee farmers would get more rain if an El
Niño developed, but they need rain today, and the rains would not occur
until harvest season in July and August -- and thus would slow and
deplete coffee production for 2014. African cocoa producers could be
affected, as could Brazilian sugar producers. Currently, we are watching
developments and will act if El Niño starts to develop.
Food Prices and El Niño -- Will El Niño Develop This Year?
In recent months, both Australian and U.S. meteorological officials
have pointed out the possibility of an El Niño weather pattern setting
up in the Pacific Ocean. As we recently noted, El Niño is a pattern
which increases rainfall in certain parts of the globe and decreases it
in others. Meteorologists believe that there is a 65 percent probability
of El Niño developing by July 2014.
Historically, El Niño has had big effects on commodity prices -- primarily nickel, copper, and food prices. Nickel has already risen, because even before an El Niño event, Indonesia has curtailed shipments from its mines. Indonesia is the world’s largest producer, and much of its production is created using hydropower -- so an event could send nickel prices higher. As readers know, nickel is an important component of steel production. On the other hand, copper production could be impeded by an excess of rain in Chile’s mountains, making copper mining and transportation more difficult.
El Niño usually increases rains in California, eastern China, and the U.S. sunbelt, and decreases rains in India, northern Brazil, Indonesia and Australia.
Historically, El Niño has had big effects on commodity prices -- primarily nickel, copper, and food prices. Nickel has already risen, because even before an El Niño event, Indonesia has curtailed shipments from its mines. Indonesia is the world’s largest producer, and much of its production is created using hydropower -- so an event could send nickel prices higher. As readers know, nickel is an important component of steel production. On the other hand, copper production could be impeded by an excess of rain in Chile’s mountains, making copper mining and transportation more difficult.
El Niño usually increases rains in California, eastern China, and the U.S. sunbelt, and decreases rains in India, northern Brazil, Indonesia and Australia.
Food prices are less likely to be impacted by El Nino in 2014, with the
exception of coffee, cocoa and sugar. The country which is most
vulnerable to an El Niño event that affects its monsoon is India -- a
country very dependent upon subsistence agricultural and extremely
dependent upon its monsoon rains. If these were to be affected, India
could suffer from food inflation and possible shortages.
Outside of India, much of Asia has a strong surplus of rice and other
food grains and is less likely to be immediately affected.
Drought-impacted Brazilian coffee farmers would get more rain if an El
Niño developed, but they need rain today, and the rains would not occur
until harvest season in July and August -- and thus would slow and
deplete coffee production for 2014. African cocoa producers could be
affected, as could Brazilian sugar producers. Currently, we are watching
developments and will act if El Niño starts to develop.
Food Prices and El Niño -- Will El Niño Develop This Year?
In recent months, both Australian and U.S. meteorological officials
have pointed out the possibility of an El Niño weather pattern setting
up in the Pacific Ocean. As we recently noted, El Niño is a pattern
which increases rainfall in certain parts of the globe and decreases it
in others. Meteorologists believe that there is a 65 percent probability
of El Niño developing by July 2014.
Historically, El Niño has had big effects on commodity prices -- primarily nickel, copper, and food prices. Nickel has already risen, because even before an El Niño event, Indonesia has curtailed shipments from its mines. Indonesia is the world’s largest producer, and much of its production is created using hydropower -- so an event could send nickel prices higher. As readers know, nickel is an important component of steel production. On the other hand, copper production could be impeded by an excess of rain in Chile’s mountains, making copper mining and transportation more difficult.
El Niño usually increases rains in California, eastern China, and the U.S. sunbelt, and decreases rains in India, northern Brazil, Indonesia and Australia.
Historically, El Niño has had big effects on commodity prices -- primarily nickel, copper, and food prices. Nickel has already risen, because even before an El Niño event, Indonesia has curtailed shipments from its mines. Indonesia is the world’s largest producer, and much of its production is created using hydropower -- so an event could send nickel prices higher. As readers know, nickel is an important component of steel production. On the other hand, copper production could be impeded by an excess of rain in Chile’s mountains, making copper mining and transportation more difficult.
El Niño usually increases rains in California, eastern China, and the U.S. sunbelt, and decreases rains in India, northern Brazil, Indonesia and Australia.
Food prices are less likely to be impacted by El Nino in 2014, with the
exception of coffee, cocoa and sugar. The country which is most
vulnerable to an El Niño event that affects its monsoon is India -- a
country very dependent upon subsistence agricultural and extremely
dependent upon its monsoon rains. If these were to be affected, India
could suffer from food inflation and possible shortages.
Outside of India, much of Asia has a strong surplus of rice and other
food grains and is less likely to be immediately affected.
Drought-impacted Brazilian coffee farmers would get more rain if an El
Niño developed, but they need rain today, and the rains would not occur
until harvest season in July and August -- and thus would slow and
deplete coffee production for 2014. African cocoa producers could be
affected, as could Brazilian sugar producers. Currently, we are watching
developments and will act if El Niño starts to develop.
Food Prices and El Niño -- Will El Niño Develop This Year?
In recent months, both Australian and U.S. meteorological officials
have pointed out the possibility of an El Niño weather pattern setting
up in the Pacific Ocean. As we recently noted, El Niño is a pattern
which increases rainfall in certain parts of the globe and decreases it
in others. Meteorologists believe that there is a 65 percent probability
of El Niño developing by July 2014.
Historically, El Niño has had big effects on commodity prices -- primarily nickel, copper, and food prices. Nickel has already risen, because even before an El Niño event, Indonesia has curtailed shipments from its mines. Indonesia is the world’s largest producer, and much of its production is created using hydropower -- so an event could send nickel prices higher. As readers know, nickel is an important component of steel production. On the other hand, copper production could be impeded by an excess of rain in Chile’s mountains, making copper mining and transportation more difficult.
El Niño usually increases rains in California, eastern China, and the U.S. sunbelt, and decreases rains in India, northern Brazil, Indonesia and Australia.
Historically, El Niño has had big effects on commodity prices -- primarily nickel, copper, and food prices. Nickel has already risen, because even before an El Niño event, Indonesia has curtailed shipments from its mines. Indonesia is the world’s largest producer, and much of its production is created using hydropower -- so an event could send nickel prices higher. As readers know, nickel is an important component of steel production. On the other hand, copper production could be impeded by an excess of rain in Chile’s mountains, making copper mining and transportation more difficult.
El Niño usually increases rains in California, eastern China, and the U.S. sunbelt, and decreases rains in India, northern Brazil, Indonesia and Australia.
Food prices are less likely to be impacted by El Nino in 2014, with the
exception of coffee, cocoa and sugar. The country which is most
vulnerable to an El Niño event that affects its monsoon is India -- a
country very dependent upon subsistence agricultural and extremely
dependent upon its monsoon rains. If these were to be affected, India
could suffer from food inflation and possible shortages.
Outside of India, much of Asia has a strong surplus of rice and other
food grains and is less likely to be immediately affected.
Drought-impacted Brazilian coffee farmers would get more rain if an El
Niño developed, but they need rain today, and the rains would not occur
until harvest season in July and August -- and thus would slow and
deplete coffee production for 2014. African cocoa producers could be
affected, as could Brazilian sugar producers. Currently, we are watching
developments and will act if El Niño starts to develop.
Food Prices and El Niño -- Will El Niño Develop This Year?
In recent months, both Australian and U.S. meteorological officials
have pointed out the possibility of an El Niño weather pattern setting
up in the Pacific Ocean. As we recently noted, El Niño is a pattern
which increases rainfall in certain parts of the globe and decreases it
in others. Meteorologists believe that there is a 65 percent probability
of El Niño developing by July 2014.
Historically, El Niño has had big effects on commodity prices -- primarily nickel, copper, and food prices. Nickel has already risen, because even before an El Niño event, Indonesia has curtailed shipments from its mines. Indonesia is the world’s largest producer, and much of its production is created using hydropower -- so an event could send nickel prices higher. As readers know, nickel is an important component of steel production. On the other hand, copper production could be impeded by an excess of rain in Chile’s mountains, making copper mining and transportation more difficult.
El Niño usually increases rains in California, eastern China, and the U.S. sunbelt, and decreases rains in India, northern Brazil, Indonesia and Australia.
Historically, El Niño has had big effects on commodity prices -- primarily nickel, copper, and food prices. Nickel has already risen, because even before an El Niño event, Indonesia has curtailed shipments from its mines. Indonesia is the world’s largest producer, and much of its production is created using hydropower -- so an event could send nickel prices higher. As readers know, nickel is an important component of steel production. On the other hand, copper production could be impeded by an excess of rain in Chile’s mountains, making copper mining and transportation more difficult.
El Niño usually increases rains in California, eastern China, and the U.S. sunbelt, and decreases rains in India, northern Brazil, Indonesia and Australia.
Food prices are less likely to be impacted by El Nino in 2014, with the
exception of coffee, cocoa and sugar. The country which is most
vulnerable to an El Niño event that affects its monsoon is India -- a
country very dependent upon subsistence agricultural and extremely
dependent upon its monsoon rains. If these were to be affected, India
could suffer from food inflation and possible shortages.
Outside of India, much of Asia has a strong surplus of rice and other
food grains and is less likely to be immediately affected.
Drought-impacted Brazilian coffee farmers would get more rain if an El
Niño developed, but they need rain today, and the rains would not occur
until harvest season in July and August -- and thus would slow and
deplete coffee production for 2014. African cocoa producers could be
affected, as could Brazilian sugar producers. Currently, we are watching
developments and will act if El Niño starts to develop.
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