Tuesday, July 1, 2014

El Nino Looms -- How Will It Affect US?

It looks like there is going to be an “El Nino” this year.  This is a meteorological event which takes place in the Pacific Ocean but has global reach.

An El Nino makes countries like India, Indonesia and Australia drier. This, in turn, increases chances of wildfires and lower crop production. 

For example, India recorded the lowest amount of rain in June in five years. This is crucial to that country's food production. El Nino is expected to lower India's rainfall for the year by 7%. We will see how that impacts India's gold demand (Indian farmers buy a lot of gold).

El Nino also causes heavier rainfall in the eastern Pacific and South American nations. Finally, it tends to make the U.S. Southwest drier, and that region is already having a drought.

So, that will affect U.S. food prices and potentially our economy down the road.  Keep an eye on that.

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