"For a month and a half there have been different forecasts raising the probability there will be an El Nino," said Tobin Gorey, an economist at the Commonwealth Bank in Sydney. "So it's been bubbling in the background for a while."

El Nino, the "little boy" or "Christ Child" in Spanish, occurs when surface water temperatures remain warmer than usual in the Pacific off South America. A weakening of trade winds may add to the problem.

The impact can be far reaching, as it was in 1997-98, when it produced strange weather patterns around the world. In 2002, a so-called mild El Nino caused big disruptions in Australia.

"The weak-to-moderate El Nino in 2002-03 caused widespread drought, devastating agricultural regions across much of Australia," said Mike Coughlan, head of the National Climate Center at the Australian Bureau of Meteorology.

RISK TO CHINA

Mark Spencer, chief equity strategist for Merrill Lynch in Hong Kong, said a range of companies in agriculture could be hard hit and big importing countries such as China would have to deal with a sharp run-up in prices if a drought impairs global harvests.

"Should it occur over the next few months it could have significant local effects," Spencer said.

India is already blaming the phenomenon for weakening this year's monsoon, which is crucial for the country's crops.

"If the warming had not taken place, we could have received good rains in the monsoon season," said M. Rajeevan, a director at the India Meteorological Department.

Warming during the monsoon season is not good for India but would be beneficial for the country if it starts before the rainy season and cools during the monsoon, he said.

Malaysia and Thailand, which both suffered big losses in the 1997-98 El Nino, are wary of another event hampering their output for such export staples as rice and palm oil.

"There is a tendency that it could form next year," said an official at the meteorological department's climatology division.

Malaysia said an El Nino lasting four months would cut its world-leading palm oil production by 20 percent.

"If an El Nino starts from December, its effect on Malaysian crops will be felt from September 2005," said M.R. Chandran, chief executive of the Malaysian Palm Oil Association. "Dry weather will affect palm buds, which need moisture to survive.

Vietnamese officials believe El Nino has already emerged in the region, but that it is less serious than when it struck the country with severe droughts in 1982-1983 and 1997-1998.

"The return of El Nino is very much obvious, (it is) at its starting stage," said Le Thi Xuan Lan, a state weather official.

Lan said El Nino has since the end of June caused three minor, abnormal dry spells in southern Vietnam, home to the country's coffee belt and the Mekong Delta rice basket.

Vietnam is the world's top robusta coffee exporter and ranks second after Thailand in rice exports.

Lan said while rice and coffee crops would be safe, the El Nino would dump three or four storms on Vietnam's coast between now and the year end, affecting the country's fisheries.

"While the farmers growing the winter-spring rice crop would benefit from the rains in November or December, fishing ships could be at risk at that time of the year," Lan said, referring to Vietnam's highest yielding, export quality rice crop. (Additional reporting by Ho Binh Minh in Hanoi, Michael Byrnes in Sydney and Atul Prakash in Bombay)