El Niño quiets his temper tantrums, will La Niña start hers?

 

El Niño seems to be quieting down, after reports of “substantially” lower temperatures in the pacific. The question is; What happens next? Well, the Australian Bureau of Meteorology says in a media update that La Niña years follow El Niño years about 40% of the time. And for 10% of the time another El Niño year follows after an El Niño year. USDA meteorologist Brad Rippey says that the effects of  El Niño are still being felt, further delaying La Niña, which is already underway. The National Oceanic Atmospheric Association (NOAA) says on the 11th of April that there is an 85% chance of ENSO (El Niño Southern Oscillation) in April-June and a 60% chance of La Niña developing in June-August. La Niña is characterized by being colder and gives more rainfall. This is a blessing for some and a curse for others. Indian agriculture flourishes from increased monsoons, while Northern Australia experiences catastrophic floods. 

In other news, tough times seem imminent for rural American farmers. European wheat and wheat from the Black Sea keeps outcompeting US wheat, leaving US wheat farmers worrying that profits are getting more and more out of reach. Equipment, labor and transportation costs are high leaving farmers unable to break even, despite experiencing some of their best crop for some time. These unsettling times contribute to a bleak trend in the US, where wheat farmers are diminishing over the years. Wheat farms have decreased by 40% the last two decades, after farmers favored other crops. 

The latest sudden development in prices happened night to Friday this week, when Israel retaliated against Iran's attack on the 12th of April. Price spikes in both corn and wheat were observed at both of these events. It is reasonable to believe the spikes reflect increased fear of an escalation of conflicts in the Middle East, possibly disrupting supply chains. Neither of the attacks led to an immediate escalation, and it did not take long for the prices to stabilize after the events. More spikes like these may happen in the time to come if the two countries continue to retaliate.

In terms of prices, wheat has turned since last time and ended the week at $550.75 per contract. Corn stays somewhat stable since experiencing some fluctuations, but ends the week at $433.25 per contract.

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