El Ninos can roil world agricultural markets as farmers contend with drought or too much rain. Palm oil, cocoa, coffee and sugar are most at risk, Goldman Sachs Group Inc. estimates. Rabobank International has warned the size of a global sugar deficit next season will depend on how El Nino develops, while the event may spur a 22 percent rally in palm oil prices, according to Dorab Mistry, director at Godrej International Ltd.

“While the majority of climate models suggest El Nino remains likely for the spring of 2014, most have eased their predicted strength,” the Melbourne-based bureau said today, referring to the season in the Southern Hemisphere. It maintained an alert for the event.

Five of eight international models signal El Nino will probably develop by the end of spring, with about half indicating the event will be established by September, the bureau said. The odds of an El Nino during the Northern Hemisphere summer are about 70 percent, the U.S. Climate Prediction Center estimates.

Monsoon Rains

The degree of tightening in the sugar market depends on El Nino, Rabobank said in a report e-mailed yesterday. The bank predicted a 900,000-ton deficit for 2014-2015 from a 1.4 million ton surplus in 2013-2014. Poor monsoon development and the prospect of the event may hurt yields in India, the world’s second biggest producer, it said.

The chances of a drought in the country increased to 60 percent from 25 percent in April amid forecasts for El Nino, Skymet Weather Services, a New Delhi-based private forecaster, said July 4. Showers in June were the lowest since 2009. The monsoon accounts for more than 70 percent of annual rainfall.

Most parts of the country will get widespread rains in the week through July 22, according to theIndia Meteorological Department. Rainfall was 4 percent above average yesterday, trimming the seasonal shortage in showers to 41 percent from 43 percent a week earlier, department data showed.

Surface Temperatures

Palm oil may climb to 2,800 ringgit a metric ton by December if the weather event occurs from mid-August, Mistry said June 26, cutting his March forecast for a rally to 3,500 ringgit. A rise may be capped if an El Nino starts later than expected, he said. Prices, which entered a bear marketyesterday, last traded at 2,298 ringgit in Kuala Lumpur.

Australia’s weather bureau said July 1 that while surface temperatures in the tropical Pacific were at levels typically associated with a weak El Nino, sub-surface temperatures had cooled and there wasn’t the corresponding atmosphere change to support a declaration.

El Ninos, caused by periodic warmings of the tropical Pacific, occur every two to seven years and are associated with warmer-than-average years. The last El Nino was from 2009 to 2010, and the Pacific has either been in its cooler state, called La Nina, or neutral since then.

To contact the reporter on this story: Phoebe Sedgman in Melbourne atpsedgman2(at)bloomberg.net

To contact the editors responsible for this story: James Poole at jpoole4(at)bloomberg.net