The US National Weather Service on Thursday warned that La Niña, the weather condition that caused turmoil in the commodities markets this year, had returned and was likely to strengthen throughout the rest of the year.

La Niña, caused by a fall in water temperature in the tropical Pacific, typically triggers wetness in eastern Australia, and drier than normal conditions in the midsection of the US and countries in the southern hemisphere including Brazil and Argentina.


This year, cyclones and heavy rains in Australia and Brazil affected the mining industries alongside dry conditions in Argentina and Brazil and the US, which have had a heavy impact on agricultural yields. In a regular update on Thursday, the NWS said that a new La Niña had already formed just months after the last one dissipated. “While it is not yet clear what the ultimate strength of this La Niña will be, La Niña conditions have returned and are expected to strengthen gradually and continue into the northern hemisphere winter 2011-12,” the government forecaster said.

The weather pattern has put agricultural commodities traders on edge as they fear a new period of disruption to commodity production that could push prices up from current near-record levels.

“Everybody has an eye on what is going to happen this year,” said Ana Vohringer Wilks, director of coffee at Armajaro Trading, an agricultural commodities trading house. She warned that dry weather could affect the flowering of the important new crop in Brazil.

Kona Haque, analyst at Macquarie, is forecasting a “moderate” La Niña, but warned that the impact on prices could be sizeable as it came at a time when inventory levels were low.

“We’ve come out of a very strong La Niña, which has come back to back of an El Niño situation [the opposite phenomenon]. And now we are back with another La Niña, which is unusual so soon,” she said.

Commodity Weather Group, a meteorological consultancy, expects the new La Niña will not be as strong as the last one, which should lessen the intensity of the flooding in Australia. But said “some of the more recent readings show that it could be a little stronger than first thought which will need to be monitored”.

It said dryness in Brazil could threaten corn, cotton and soyabean production, while Australia’s wheat and cotton crops were likely to benefit from the wetter conditions as would corn production in South Africa.