Entering text into the input field will update the search result below

El Nino, The Indian Monsoon And Agriculture Commodities

Michael Ferrari profile picture
Michael Ferrari


  • El Nino and the Indian Monsoon is causing concern for the agriculture sector.
  • Potential effects on sugar, coffee and dairy prices.
  • Price impacts may be felt in physical commodities and in the food & beverage sector.

For agricultural commodity risk managers who are closely following the daily weather forecasts in anticipation of the arrival of the Southwest Monsoon in India this year, there is a heightened level of uncertainty now that we are in the first week of June and the onset is slightly behind the 'normal' schedule. Recent information from the India Meteorological Department (IMD) shows the progression of the northern limit of this year's Monsoon vs. normal; by this date, the Monsoon has typically progressed to reach much of Karnataka and Andhra Pradesh. Given last year's rainfall deficiencies, coupled with the recent heat wave which has been reported to be responsible for over 2200 deaths, the importance of the annual flow of moisture to the subcontinent in 2015 takes on a special significance. In addition, the behavior of the Monsoon will directly affect the Indian agriculture sector, but the effects go beyond the physical commodities. A healthy Monsoon means more agricultural production, leading to more liquidity into ancillary markets, stimulating overall economic output.

The IMD has forecast another year of deficient rainfall for India, in part due to the developing El Nino conditions, which may serve to limit the availability of moisture for parts of Southeast Asia. However, there are other groups (notably Skymet) who are publicly challenging the IMD view, calling for a better distribution of Monsoon rains this year. Skymet's methodology cites physical drivers such as the positive phase of the Indian Ocean Dipole (IOD), which correlates with conditions supporting better Monsoon convection and flow. Looking at both discussions, there are certainly plausible physical reasons to support both Monsoon scenarios. Any forecast, by nature, contains uncertainty, so regardless of which forecast camp one may belong to, additional tools are needed to assess: (a) the direct weather risk; (b) the commodity value at risk; and (c) the broader economic value at risk associated with Monsoon rains. Although the Monsoon has kicked off

This article was written by

Michael Ferrari profile picture
Michael Ferrari is a Senior Scientist and Director of Commodities at aWhere, where his research and technology transfer activities focus on improving their global agricultural/climate/life sciences data platform. He is also the founder and principal at Atlas Research Innovations, which provides applied research and bespoke services to clients in the private and public sector, government, and academia. Previously, he was the Director of Agricultural Commodity Research & Risk Management for The Coca-Cola Company, the Director of Informatics and a Principal Scientist at NASA for Computer Sciences Corporation, Vice President of Applied Technology and Commodities at WTI, and a Research Scientist and Commodity Trader at Mars. He spends much of his time building tools and models with sensors and data, creating algorithms, and directing commercial research activities towards the examination of the global food and climate complex from a systems perspective. Michael is a frequent speaker at scientific, commodity and data/technology conferences around the world, where his talks focus on the confluence of human-environmental-technology interaction and the broader relationship of these topics to societal issues including climate, food and energy security, and global change. Michael holds a PhD in Geophysical Fluid Dynamics and Environmental Biophysical Modeling from Rutgers; his doctoral work in numerical modeling was supported by the NASA Goddard Institute for Space Studies.

Analyst’s Disclosure: The author has no positions in any stocks mentioned, but may initiate a long position in DBA, PBJ, MOO, VEGI over the next 72 hours. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it. The author has no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You

Comments (2)

Michael Ferrari profile picture
discussed in linked post
vireoman profile picture
Southern Brazil typically experiences wetter than normal conditions during El Nino. So under your scenario, Brazilian sugar-producers such as Cosan could prosper.
Disagree with this article? Submit your own. To report a factual error in this article, . Your feedback matters to us!

Related Stocks

SymbolLast Price% Chg
Invesco DB Agriculture Fund ETF
ELEMENTS Linked to the Rogers International Commodity Index - Agriculture Total Return
DB Agriculture Double Long ETN
iPath® Series B Bloomberg Agriculture Subindex Total Return ETN
DB Agriculture Double Short ETN

Related Analysis

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.