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El Nino weather menace looms for frail economies

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An aerial view of the flooded outskirts of Trinidad, Beni, some 400 kilometers (250 miles) northeast of La Paz, February 22, 2007. A nascent El Nino weather cycle threatens to wreak more economic havoc and disrupt raw material production across a wide swath of the world, evoking memories of the killer edition of 1998.

El Nino weather menace looms for frail economies

NEW YORK (Reuters) – A nascent El Nino weather cycle threatens to wreak more economic havoc and disrupt raw material production across a wide swath of the world, evoking memories of the killer edition of 1998.

The timing could not be worse. This El Nino appears to be developing as the world is struggling to emerge from the worst economic conditions since the Great Depression. Eleven years ago, a damaging El Nino occurred in the middle of the Asian financial crisis which roiled financial markets.

“El Nino is a little bit like recession: you are in it before you can say you have one. If it continues as it is now, the historians will say the El Nino started in May,” said David Jones, head of climate analysis in Australia’s Bureau of Meteorology. Jones said they could declare an El Nino in weeks.

During El Nino, an abnormal warming of the waters of the equatorial Pacific unhinges weather patterns in the Asia-Pacific region and beyond. A La Nina weather pattern, in which waters cool, was in place last year.

In 1998, El Nino-related storms, floods, tornadoes and mudslides killed more than 2,000 people and caused billions of dollars in damage to crops, infrastructure and mines.

Michelle L’Heureux, head of the U.S. Climate Prediction Center which tracks El Nino, said this version may not approach the one in 1998, the strongest weather anomaly in 150 years. The CPC is an office under the U.S. National Oceanic Atmospheric Administration.

If the anomaly does recur with severity, drought in Asia could lift grain prices, which are already near historic levels due to supply shortages, while storms that would disrupt crude production in the Gulf of Mexico may be minimized.

Mike Palmerino, U.S. agricultural meteorologist with DTN Meteorlogix, added: “This one has a little more going for it. But a year ago at this time it looked like we were building toward an El Nino and everything just totally fell apart toward the end of the summer, where all the Pacific circulation patterns changed and we actually slipped back into a La Nina.”

COMMODITIES WEATHER WATCH

Some forecasters fret that an early sign of this El Nino is the weak annual monsoon plaguing India, one of the world’s biggest producers and consumers of everything from sugar to soybeans.

The monsoon rains are the lifeblood for farmers in India. Its faltering sugar crop is a prime reason why sugar prices are at their highest levels in three years.

China typically turns to South America for soybeans during the U.S. growing season. But the 2009 crops from Brazil and Argentina are suffering from drought and U.S. soybean stocks are at a 32-year low — less than two weeks of normal commercial supply.

Shawn McCambridge, grains analyst with Prudential Bache Commodities in Chicago, said the El Nino could “dry out the second half of 2009 in Australia and it can also affect South American production.

“It’s developing a little too late to really have much of an impact on the Northern Hemisphere, but the concern would be in the Southern Hemisphere (crops),” he said.

Indonesia, one of the biggest producers of palm oil and a large consumer of sugar and rice, faces drought.

Australia is one of the world’s biggest wheat producers and has barely recovered from the worst drought in 100 years which hit a few years ago.

Rob Imray, general manager of grain trading and agricultural risk management firm Farmarco, said the Australian wheat crop is off to a good start but the southern areas could suffer if no rain arrives in August and September.

EFFECT ON METALS?

Severe floods may disrupt mining operations in Chile, the world’s biggest copper producer, and Peru, among others.

India is the world’s biggest gold buyer when farmers, whose annual income is tied to the monsoon, buy the metal for the festival of lights celebrating the end of their harvest in November.

Still, Andrew Montano, a director at bullion dealer ScotiaMocatta in Toronto, said, “the bulk of the demand is coming from international investors, more so than from the Indian subcontinent.”

In the United States, El Nino could funnel wind shear into the Atlantic basin and hinder storm formation during the annual hurricane season.

Vernon Kousky, former head of the CPC, said there could “be a suppression of Atlantic hurricane activity, provided that further intensification of El Nino occurs during the next couple of months.”

A strong El Nino could lead to a mild winter in the Northeast, the world’s biggest heating-oil market. The snow pack in the Western United States may also suffer and affect hydroelectric power generation.

But Stephen Schork, editor of The Schork Report in Pennsylvania, said the weak economy would mute the weather phenomenon’s impact on energy markets.

“There’s just a lot of supply out there,” he said.

(Additional reporting by Bruce Hextall and Michael Perry in Sydney, Frank Tang and Rebekah Kebede in New York, Christine Stebbins in Chicago, and Naveen Thukral in Singapore)

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Indonesia’s Yudhoyono set for one-round election win

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President Susilo Bambang Yudhoyono’s campaign team flash the victory sign in Cikeas, West Java in Jakarta July 8, 2009.

Indonesia’s Yudhoyono set for one-round election win

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Indonesian presidential candidate Susilo Bambang Yudhoyono (C), his wife Kristiani Yudhoyono (R) and his son Edi Baskoro (L) show their ballot papers at a polling station in the Cikeas district in Bogor July 8, 2009.

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A man casts his ballot for the Indonesian presidential election in Jakarta July 8, 2009.

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A voter dips his finger with ink at a polling station in Cikeas district in Bogor July 8, 2009.

BOGOR, Indonesia (Reuters) – President Susilo Bambang Yudhoyono looked set to win a second term on Wednesday as provisional election results showed there would be no need for a run-off vote, opening the way for a period of quickening reform.

“I think it’s clear now that Yudhoyono has won in one round,” said Kevin O’Rourke, a Jakarta-based political risk analyst.

Political allies flocked to Yudhoyono’s home in Bogor, on Java island, to congratulate the former army general as “quick counts” of votes cast across the archipelago of 226 million people rolled in.

“Continue!” they chanted, using Yudhoyono’s campaign slogan.

With about 94 percent of the LSI polling agency’s sample of votes counted, Yudhoyono’s tally stood at a commanding 60.8 percent. He will need to secure half of the votes to avoid a run-off with the nearest of his two challengers.

The official verdict on the election will come later this month, but “quick count” results have proved extremely reliable in the past.

The election, only the second direct vote for a president in Indonesia, will determine the pace of reform over the next five years and cement the country’s transition to democracy.

Analysts expect that in a second term Yudhoyono would quicken the pace and widen the scope of reforms in Southeast Asia’s biggest economy to attract badly needed foreign investment, create jobs and shore up flagging economic growth.

Indonesian stocks, bonds and the rupiah have rallied this year on the prospect of a Yudhoyono win, and analysts now see them rising further on the results. Jakarta markets were closed for the election.

A decade ago, Indonesia was the sick man of Asia. After 32 years of rule by Suharto, who oversaw a system of entrenched corruption and nepotism, it stood on the brink of political, social and financial collapse.

Yudhoyono’s government has since brought political stability, peace and the best economic performance in a decade. Today, some see the country on another brink — of economic take-off and joining the emerging “BRIC” economies of Brazil, Russia, India and China.

Nevertheless, the world’s most-populous Muslim nation is hardly problem-free: corruption is widespread, infrastructure is in dire need of an overhaul and millions live in poverty.

CHALLENGERS WAY BEHIND

Analysts say Yudhoyono is likely to pick more technocrats, and fewer politicians from among his coalition partners, to fill his next cabinet so that the government can promote reform.

“He will try to do more to attract investment but at the same time he will be more serious about eradicating corruption. He will prioritize good governance and economic growth,” said political scientist Aleksius Jemadu at Pelita Harapan University.

“He will reform the bureaucracy to make it easier for investors to come here. He will make sure some of the red tape and the bureaucratic obstacles will be removed.”

The LSI vote count showed that Yudhoyono’s challengers, former president Megawati Sukarnoputri and Vice President Jusuf Kalla, were trailing at around 27 and 13 percent, respectively.

Megawati and Kalla adopted a more nationalist tone than Yudhoyono in their campaigns, promising to squeeze more from the country’s rich resources to pay for pro-poor policies.

A controversy over voter lists marred the run-up to the election, with the teams of Yudhoyono’s two rivals complaining about millions of duplicate names and even the names of dead people and children on the electoral rolls.

There remains a small risk that the pair could use the doubt sown about the credibility of the vote to challenge the result.

U.S. President Barack Obama, who lived in Indonesia as a child, is expected to visit the country later this year — a trip that would warm ties that both countries say they plan to raise to the level of “comprehensive partnership.

However, U.S. trade officials and businesses complain about a range of protectionist policies, including judicial and bureaucratic bias favoring Indonesian firms, as well as rampant corruption that distorts the economic playing field.

(Additional reporting by Ed Davies, Sunanda Creagh, Olivia Rondonuwu and Telly Nathalia in Jakarta; Writing by John Chalmers; Editing by Sara Webb)

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Late checks on Indonesia poll lists ahead of vote

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Abdul Hafiz Anshary (C), the head of the General Election Commission (KPU), poses with presidential candidate Jusuf Kalla (2nd L) and his running mate Wiranto (L), and presidential candidate Megawati Sukarnoputri (2nd R) and her running mate Prabowo Subianto (R) after their meeting in Jakarta July 6, 2009.

Late checks on Indonesia poll lists ahead of vote

JAKARTA (Reuters) – The two challengers for Indonesia’s presidency started cross-checking electoral rolls on the eve of polling on Tuesday, after lodging complaints that the sprawling country’s voter lists were riddled with irregularities.

Opinion polls have consistently shown that President Susilo Bambang Yudhoyono will trounce his rivals, winning a second term and a chance to quicken the pace of reform in Southeast Asia’s biggest economy.

The objections to the voting process, led by Yudhoyono’s challengers, former president Megawati Sukarnoputri and Vice President Jusuf Kalla, are not expected to derail the election.

However, analysts said the complaints could be a tactic aimed at fanning public doubt about the credibility of the process and pave the way for the losing contestants to challenge the result.

Security was stepped up in the capital, Jakarta, and other parts of the country on Tuesday because of fears that wrangling over the credibility of the register of some 176.3 million voters could spark protests in the world’s third-largest democracy.

“People should not be confused, and this should not make the world view what is happening in our country as abnormal,” Yudhoyono told reporters late on Monday, urging his rivals not to act improperly ahead of the vote.

A victory for Yudhoyono would most likely bring a renewed push for reform to attract foreign investment, create jobs and drive economic, which has slowed from 6.1 percent in 2008 and is expected to come in at between 3 and 4 percent this year.

If he wins the first round with more than half the votes, on the back of his modest success in tackling graft and the best economic performance in a decade, stocks, bonds and the rupiah are likely to surge on hopes of a more ambitious reform plan in his next five-year term and beyond.

However, the atmosphere was tense in Papua, where extra police and special forces were on standby after recent violence linked to separatists in the remote province.

Papuans wearing traditional penis gourds looked on as booths were set up using traditional woven bags instead of ballot boxes.

A victory for Yudhoyono would most likely bring a renewed push for reform to attract foreign investment, create jobs and drive economic, which has slowed from 6.1 percent in 2008 and is expected to come in at between 3 and 4 percent this year.

“We hope to be able to see a continuation of the reforms that we already started,” Trade Minister Mari Pangestu told Reuters in an interview, adding that the new government would need to send “a strong signal that we are moving in the right direction”.

If Yudhoyono takes more than half of the votes in the vote there will be no need for a run-off with the runner-up. A clear picture of the result should emerge by around 2 p.m. (0700 GMT).

Analysts say a victory for Yudhoyono, widely known as “SBY”, would come on the back of his modest success in tackling graft and the best economic performance in a decade.

Stocks, bonds and the rupiah have rallied this year on the prospect of a Yudhoyono win, and analysts see them rising further on hopes for a heftier reform drive in his next five-year term.

The rupiah , the best-performing currency in Asia so far in 2009, eased 0.3 percent against the dollar in afternoon trade on Tuesday. Indonesian stocks, which are up 50 percent so far this year, were up about 1 percent

Indonesian sovereign bond prices have also rallied in the last few months, with yields set to fall further if foreign investors return after the presidential election, traders said.

Concern over the voting lists arose first in the run-up to a parliamentary election in April, when duplicate and fictitious names were found on rolls and some voters were not registered.

Tension over the issue was partly defused on Monday when key demands made by Kalla and Megawati were met, including their request to receive copies of the electoral rolls.

Indicating that Yudhoyono’s opponents were backing away from earlier suggestions they could ask for the poll to be postponed, Megawati on Tuesday urged her supporters to go out and vote.

But her running-mate, Prabowo Subianto, said he still believed there were a minimum of 10 million names with problems.

“We expect it could be potentially as many as 20 million names,” the former general told a news conference.

An economist at the Danareksa Institute played down the prospect of violence over the list dispute.

“I think the losing parties will complain but I don’t think they will challenge in a serious way,” said Purbaya Yudhi Sadewa.

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