Explaining the El Nino
El Niño is a phase of what is known as ENSO or the El Nino Southern Oscillation Cycle over the Pacific Ocean. Basically, it causes temperature differences in the Pacific Ocean, thus affecting the winds.
El Nino and the Indian Monsoon
- The ENSO cycle is the fluctuations in temperature between the ocean and the atmosphere in the Equatorial Pacific leading to changes in the expected rainfall patterns.
- El Niño is distinguished by abnormally warm (as seen by the Nino index) ocean warmth in the Equatorial Pacific.
- The La Nina is set apart by extraordinarily cold ocean temperatures in the Equatorial Pacific.
These El Nino actions deteriorate the summer westerly winds over the Indian Ocean. Because of this, it leads to fewer monsoon rains in India. - Since our agriculture is very dependent on the monsoon, this causes massive crop losses.
The Situation From 2014-Now
Ten states in India have been experiencing El Nino caused droughts for two years. In 2016, because of expected La Nina, this is supposed to be a little better. The prediction is that as El Nino is receding, it will continue to recede, and there are expectations of good monsoon over the next two years.
Market forces aren't looking up. Considering the estimated US $100 billion losses, this isn't surprising.
A lot of our commodity markets are based on agriculture, and there are also indirect markets which will be influenced by agricultural production, as the sugar industry.
The El Nino over the last year has hurt rice, corn, sugarcane and oilseed crops.