We know that El Nino years tend to correlate with decreased tropical activity in the Atlantic Basin, usually resulting in a season with fewer named storms.  This does not mean that there won’t be any significant hurricanes during El Nino years, but the overall activity will be suppressed by cooler Sea Surface Temperatures (SST) across the central Atlantic, fewer storms generating off of the West African coast, and increased shearing.  So during La Nina years, the probability of more active seasons tends to increase.  Recently, the Southern Oscillation Index has weakened, but is still strongly in positive phase (+SOI is a La Nina indicator) and the central and northern Atlantic is showing a positive SST profile.  Most dynamical and statistical seasonal models are showing that the La Nina has peaked, but the transition to a neutral Nino state may still take some time.  This means that La Nina conditions can still be present when we enter the 2011 hurricane season, and that may guide how the season starts.

In the chart above, the blue bars depict the number of classified hurricanes (greater than Category 1) each year between 1966 and 2010, and the red line represents the average April through September SOI value.  Note that the general pattern of higher groups of years with positive SOI values typically corresponds with more active tropical seasons over the last four decades.  While there is still uncertainty surrounding the behavior of La Nina during the hurricane season, as we approach the start to the 2011 hurricane season, indicators are pointing to another active year.

case in point: this image from NOAA’s Environmental Visualization Laboratory.

The following week, I will be attending the Strata Conference in Santa Clara, presented by O’Reilly Media.  The theme of turning data into products is very important and exciting for Weather Trends with regards to some of the new avenues that we are pursuing with current clients and prospects.

( map courtesy of IRI/LDEO )

Index values >2 correlate with extremely wet conditions for the particular region.  Droughts often are broken with an extreme pattern in the opposite direction, and while the short term ramifications to the agricultural sector in eastern Australia will see a negative impact in the current crop year, this pattern is likely to have a benefit for the following year(s) as areas that have been moisture deficient will have the ability to recharge soil moisture and groundwater.

This article in Bloomberg Business Week today is in line with how we are viewing the current US corn & soybean crops at Weather Trends.  No doubt, the 2010 crop for both commodities will still produce good numbers for the 18 major growing states.  However, we think both the USDA and the market are too optimistic regarding crop potential.  Look at the July map below – this shows the year-over-year (2010/09) max temperature for July.  Remember, 2009 was a ‘good weather year’, particularly in the Jul-Sep time period.  Heat stress in July followed by a very wet start to August in key states will likely translate to smaller yield numbers than the market is currently figuring.

As a result, we are in agreement with the assessments in the article quoting the analyst from Northstar Commodities. 

An active monsoon pattern in northern India finally kicked off last week, and the short range pattern looks like it will continue to provide moisture to sugarcane regions in the northeastern states.  While the last few weeks have seen steady strength in raw sugar futures, the rains could keep trading in the current range for the next 1-2 weeks.  The Weather Trends image below is the satellite from 15 Jul, 10:15 UTC.  Despite the current outlook, for the northeast, when we look at the country as a whole, there are still rainfall deficiencies (which we have addressed in previous posts) in the central and northern regions, and this should be a cause for concern among cane growers.  The Indian Met Department has been highlighting these potential deficiencies in recent discussions as well.

While rains in the north are positive news for cane growers, there is a possible offset to the favorable short range weather outlook: India’s domestic stockpiles for the sweetener are still very low, so physical supply may be held back from the market, thereby keeping sustained upside pressure on raw prices, which we have seen this week; raw sugar futures for Oct-10 have inched up from around 16.6 at the start of the week to 17.2 in trading yesterday.  In addition, most talk in the market among traders has been overtly bullish in the short term.  Strong demand, particularly from Asia, coupled with lower than previously expected stocks going into the new crop year (Oct 2010) should support activity in a range between 16 and 18 cents over the next couple of months.