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PALM OIL PRODUCTION TO FALL
AVERAGE WINTER EXPECTED
AUSTRALIAN WHEAT CROP OK!
Prepared by Atlas Forecast
El Nino Marches On!
The drought in Indonesia has intensified. The rains have come to California and Brazil. The sea-surface temperatures off the coast of Ecuador have remained warmer than normal. I expect the El Nino to strengthen until February when signs of weakening should begin to appear. For the coming winter, I expect that the next 90 days will see the El Nino winter pattern. The region from the states of Washington and Oregon eastward to the Great Lakes should be warmer than normal. Further south the winter will tend toward average and the Southeast will be cooler than normal. The warmer-than-normal region along the Canadian border should be the result of Pacific air flowing across the U.S. from west to east (zonal flow). Usually cold weather in this region is the result of air coming out of Alaska and Canada. This year wind out of the northwest has a low probability of occurring.
The onshore flow of moist Pacific air should keep all of the west wetter than normal. This should be aided by a dominant subtropical jet stream shown. As this jet stream moves from the West Coast across the U.S. it will also cause more cloudiness and rain in the southeast, cool weather for the southeast. Please note that this coolness is due to lack of sunshine, not to plunging cold-air masses. At the present time the subtropical jet has not yet developed as it should during an El Nino year. I expect it to be late and appear in about four to six weeks.
Also note that the subtropical jet can wander from week to week by as much as 1000 miles. Thus, some weeks the jet may be as far south as Mexico and the next week it will be in Oregon. The direction of flow will keep the western half of the U.S. wetter than normal. Above normal snowfall in the Sierras and Rockies should keep all the skiers happy.
As the subtropical jet hits the East Coast it will run into the moist air over the Gulf Stream. Low-pressure centers will form and move up along the East Coast. The wind coming around the top of the low pressure system strikes land from the northeast. In the past these low-pressure centers have produced some very strong rainstorms with the possibility of snow away from the coastal areas. These storms are often called northeasters.
The Coming Winter
There are many types of El Nino winters. Some are extreme and some are so normal they are not worth mentioning. For the last hundred years there has been an El Nino on the average every four or five years. From the way the press handles this issue one would believe that the world is going to come to an end next month. We survived over 20 El Nino events during the past century without even knowing they were present. Almost all of the winters in these El Nino years were near average or milder than normal. I think we will survive this one as well. The press usually does not mention all the climate events that were supposed to have happened and just did not appear. Nor do they mention the regions of the world that benefit from the presence of an El Nino. For example the common prediction was that India and Australia would have the worst drought this century. Instead their rainfall was near normal.
During the long-running 1991-1994 El Nino, we would have had three bumper crops in a row. Unfortunately it rained too much in 1993 and “rain did not make grain” in the western Corn Belt. However, where the rain was not excessive, farmers had three good years in a row. In 1997 El Nino year we should have had bumper corn and soybean yields in the U.S. The soybean yield turned out to be the second best ever at 39.2 bushels per acre and was only exceeded in 1994. However, the corn yield did not reach record values because of a dry July in a strip of land that reached from Missouri through central Illinois into northern Indiana. Instead we had only near-average yields.
The press only talks about the worst cases, in particular 1982/83. For 90% of the U.S. 1982/83 was a warmer-than-normal winter with little snow and few extremely cold days. Most Americans enjoyed the mild winter and would welcome seeing more of them. For California however, there was above normal rainfall and flooding rains. I would guess that more people are affected by tornadoes in a normal year than were affected by the rainfall in California in 1982/83. (A major earthquake is a different matter.)
I expect this winter to be more like the winter of 1987/88 when really not much of any note happened. The El Nino pattern of temperature was similar. The incidence of extreme weather should be rather infrequent.
World Grain Supplies Are Tight
One of the benefits of the growing world and U.S. economy has been the increase in consumption throughout outside the U.S. However, world consumption just equals production in good crop years so that ending stocks are still projected to be very tight at the end of the year. Corn ending stocks will be the tightest they have ever been in the last 25 years. Wheat ending stocks have increased over last year but are still low relative to prior years. We saw that in 1995/96 a small decrease in U.S. production produced five-dollar corn and six-dollar wheat. Thus, the world has to have a good or excellent crop each and every year to keep up with demand.
Unfortunately the weather is fickle and 1998 may be a year when the U.S. crop is below average. The drought in Indonesia will decrease palm oil production quite dramatically and the price of soybeans could jump especially in the spring when the parched crop is to be harvested.
U.S. Winter Wheat
As forecast by Atlas the winter wheat crop will enter dormancy with adequate subsoil moisture and the chance to produce an average to above- average crop next spring.
Palm Oil
The ongoing drought in southeast Asia will certainly curtail there projected production of world palm oil by 5-12%. During the last four months, rainfall has only been near 1/3 of normal over Indonesia. In Malaysia the situation is not as bad. Rainfall has been near 80% of normal. Malaysia and Indonesia produce over 80% of the world's 17.5 million tonnes of palm oil. This year, production which had been increasing by 0.5 to 1.0 million tonnes per year may not increase at all. In fact it may fall for the first time in the last twenty years. In Indonesia, production may drop to 50% of last year's 5-million tonnes. October is the wettest month in Indonesia and it normally becomes dryer until harvest in March. Trading in palm oil overtook soyoil in the 1980s and has maintained its lead ever since. The loss of palm oil production means that the demand for vegetable oil will shift to soyoil. Beginning next spring there the demand for U.S. soyoil could increase dramatically. Indonesia has already imposed a quota on the amount of palm oil to be exported. Prices should remain quite volatile until August 1998 when the size of the U.S. corn, soybean and spring wheat crops is known.
Southern Hemisphere Crops
In spite of the El Nino, the Australian wheat crop has received enough rains so that production will be 17-18 million tonnes. In addition South African corn has gotten off to a reasonable start. When the growing season began, Australian climate forecasters warned the government to expect an extreme drought. Instead an average crop has been produced, down from the bumper 23 million tonnes of the prior year but well above forecasts.
In South America the planting of soybeans in Brazil is going well and a bumper yield and crop is likely to appear. The USDA expects about 46.3 million tonnes of soybean production from South America. This is an increase of 6 million tonnes over last year.
Cocoa
The ongoing drought in Indonesia and the shift of land to palm oil in Malaysia will keep production down in these two countries. The effect of this year's drought will affect next year's cocoa production. Although the area under cultivation has increased production may fall below 300 thousand tonnes. As the drought lasts longer, the damage to the trees will increase. Thus when the rains finally arrive it may take two years before production is restored to its full potential.
Tropical Storms and Hurricanes
Assuming no further volcanic eruptions in the next seven months, the number of tropical storms and hurricanes should be above the normal of 9-10 per year. Also some of these storms may be quite strong as the amount of sunlight striking the earth continues to increase. The increase has two parts. The first is that the stratosphere is clear and the second is that we have passed the minimum in sunspot cycle and solar activity should increase.
November 26, 1997Dr. Paul Handler, Editor
Atlas Forecasts
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