Three official warnings in the last week that an El Niño weather pattern may be emerging have sparked concern that food and energy prices may surge.
El Niño consists of rising surface temperatures in the Pacific Ocean. It occurs naturally and can create both drought and floods in different parts of the world, the
Financial Times reports.
"It's certainly front of mind for everyone, from commodities analysts to farmers," Tracey Allen, a commodities analyst for Rabobank in London, told the paper. "Everyone is watching it because it could have such a significant bearing on products."
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The last strong El Niño came in 1997-98, with the United States suffering billions of dollars worth of agricultural damage, according to the FT.
"The prospects of a potential El Niño have already provided some weather risk price support to cocoa and palm oil," Kona Haque, agricultural analyst at Macquarie in London, told the paper.
U.S. officials say it's premature to panic.
"It's still far too early to guess how strong this event will be, assuming it does develop," Mike Halpert, of the U.S. Climate Prediction Center, told the FT.
There is a good side to El Nino. "It means that the Atlantic hurricane season will be rather weak because it can't stand the competition," Kevin Trenberth, senior scientist at the National Center for Atmospheric Research, told
CNN.
El Nino could increase wind shear in the Atlantic, destroying potential hurricanes.
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