Could be good news for a drought ravaged California or bad, if it leads to flooding.
This article from the Wall Street Journal notes the possibility.
NEW YORK—The weather phenomenon known as El Niño is poised to return, a development that threatens to drive up prices for food and other staples, investors and analysts say.
Temperatures in the Pacific Ocean are rising, prompting U.S. government forecasters to predict a more than 65% chance for an El Niño by the end of the year. El Niño is set in motion when winds in the equatorial Pacific slow down or reverse direction. That warms the water over a vast area and can upend weather patterns around the world. In 1997, a record-breaking El Niño caused heavy rainfall and mudslides in California and a water shortage in Australia.
El Niño has a reputation for triggering sharp run-ups for prices in markets as diverse as nickel, coffee and soybeans, and commodities investors, traders and analysts are bracing for impact. Société Générale SA GLE.FR +4.88% recently developed an El Niño commodities index at the request of a client looking to trade on the weather anomaly.
An El Niño looms at a time when global supplies of many raw materials already are stretched. Investors are loading up on commodities futures contracts that would rise in value if global food supplies are crimped further. Money managers hold more bullish than bearish bets in all 16 major agricultural futures markets, according to a Wall Street Journal analysis of data tracked by the U.S. Commodity Futures Trading Commission. The last time that was the case was in June 2011, when prices in many commodities markets were near their highest in decades.
If an El Niño forms, it is “going to be a very stressful summer,” said Hector Galvan, a senior market strategist at RJO Futures in Chicago. “It’s just more fuel to the fire for these markets.'”
Retrieved April 29, 2014 from http://online.wsj.com/news/articles/SB10001424052702304163604579527754219653232