Javier Blas in London

If there is a single weather pattern that strikes fear into agricultural and soft commodities markets, it is El Niño .

The recurring climatic event -- caused by an increase of the water temperature in the tropical Pacific -- has in the past triggered wild gyrations of wholesale food prices, as it usually brings droughts to south-east Asia and Australia.

Traders and agricultural officials are nervously watching weather models for the possible development of an El Niño later this year -- on the cards after August -- after several countries, including Australia and the US, issued early warnings .

"With weather forecasts flagging that there is a larger than 50 per cent risk of an El Niño, this is going to get lots of market attention," says Luke Chandler, director of agriculture commodity markets research at Rabobank in London.

Agriculture and soft commodities traders say the weather phenomenon has been on their radar, although most in the market agree that it is too early to say whether one will develop this year and what impact, if any, it will have on prices.

Daniel Guertin, a meteorologist at Barclays Capital's commodities desk in New York, says the traders' attention is warranted, taking into account the early signs.

"The waters in the tropical Pacific Ocean have warmed up substantially, and this is indicative of a developing El Niño later this summer or in the fall," he says.

"Market chatter about a developing El Niño is justified."

Australia's Bureau of Meteorology warned earlier last month that "the signs of a developing El Niño have strengthened".

It said many computer models were "firm in their predictions of an El Niño event in 2009. This puts the odds of an El Niño at above 50 per cent, which is more than double the normal risk of an event".

Sydney's meteorologist said, however, that it was possible, "though increasingly less likely", that the trends could stall without El Niño developing.

The US Climate Prediction Center , part of the country's weather office, said earlier last month that conditions were propitious for the development of the phenomenon this summer.

So far, analysts and traders are taking comfort from a recent period of favourable weather.

But after India late last month reported a poor start to the monsoon - which some say could be an early warning of an El Niño - concerns have grown.

Sugar prices, for example, have risen to a three-year high on worries that India's crop will be lower than expected, exacerbating the global deficit.

Palm oil prices in Indonesia and Malaysia have surged on El Niño chat.

Agricultural officials in Asia are on alert about their rice crops later this year and in early 2010.

A strong El Niño could affect crude oil and natural gas markets, as the phenomenon usually means a warmer winter in the US, the world's largest oil consumer, and fewer hurricanes hitting the energy-rich US Gulf of Mexico.

It could even affect the price of gold, as a poor monsoon hits India's agricultural economy, leaving farmers with less money to spend later on the year during Diwali festival, the busiest period of buying in the world's largest consumer of gold.