El Niño Forecast Sparks Concerns Over Food Prices in Australia

Australia's Bureau of Meteorology forecasts that El Niño will peak in late spring or summer, exceeding the levels of the warmest recorded since reliable observations began in 1950. This could lead to higher food prices in supermarkets.

Rabobank analyst Michael Harvey notes that hot and dry weather in eastern Australia's agricultural regions would affect food prices over the next 12 months. He warns of a risk to Australia's winter wheat crop, which is still expected to be substantial, as well as possible consequences for feed grain.

Commonwealth Bank agricultural economist Dennis Voznesenski points out that global wheat prices have risen by about a third since July, while in Australia they've increased by around 9%. Brent crude oil has also exceeded $97 per barrel and risen by 35% since the beginning of July, increasing farmers' diesel fuel costs.