Grain traders are concerned that a La Nińa weather event could produce hotter, drier weather in the U. S. Midwest this summer, potentially lowering crop yields.
During a La Nińa, a cooling of sea surface temperatures in the equatorial Pacific Ocean alters weather patterns around the globe. Grain traders associate La Nińa with warmer and drier conditions in the U. S. Midwest crop belt.
The exact likelihood of a summertime La Nińa is unclear. But the U. S. Climate Prediction Center, a unit of the National Oceanic and Atmospheric Administration, said in a report this week that the emergence of a La Nińa event in the second half of 2010 was “a growing possibility.”
NOAA was set to release an updated outlook June 3.
Prospects for a La Nińa have raised a degree of uncertainty in the Chicago Board of Trade corn and soybean markets, making it a bullish background factor – even though the U. S. corn crop is off to a very good start and current weather conditions are nearly ideal.
“It’s very much in the market. People have been tracking it carefully,” Rich Feltes, senior vice-president with MF Global Research in Chicago, said of the La Nińa risk.
Timing is critical. July is the critical month for the U. S. corn crop, while August is key for soybeans. If a La Nińa developed after that, the crop impact would be minimal, and could even help speed the harvest if conditions turned dry.
Elwynn Taylor, extension climatologist with Iowa State University, estimated the chance of a La Nińa in developing in June at 25 per cent.
“The drought risk is real, but not likely, as of now,” Taylor wrote in a report posted online May 27.
With U. S. corn planting nearly finished, 71 per cent of the crop was rated in good to excellent condition as of May 23, the U. S. Department of Agriculture said.
Soybeans are seen as more vulnerable to a weather scare, with planting just over halfway finished by May 23, slightly behind the average.
USDA has projected a record-large corn crop this year of 13.4 billion bushels, and the second-largest soy crop, at 3.3 billion bushels.