The past few days have suggested that the world's financial markets may have over-reacted to warnings about El Nino.

On Tuesday the International Coffee Organization reported that the average wholesale cost of coffee has fallen by half since its 11-year high at the end of May.

Hang on a moment - that's not what was meant to happen, is it? Wasn't it just a month or two ago that we were reading about the impending disaster that was threatening the coffee crops of Brazil, Indonesia and Colombia as El Nino changed their weather patterns? As recently as 30 October, we reported that "experts at the Economist Intelligence Unit believe its impact on crops such as cocoa, coffee and sugar will drive prices up." UK retail prices for coffee were up by 20-30 per cent.

Now we learn that the average wholesale cost of coffee was $1.1093 a pound this week, down from $2.2318 at its peak in May. "Traders attributed the fall to improved supplies and the prospect of a bumper Brazilian harvest next year."

But to what did traders attribute the rise in the first place? It looks suspiciously as though a correction has now taken place, following panic at the first doom-laden predictions of crop failures. Whatever the impact of El Nino's weather on coffee, it is nothing compared with the storm in a coffee-cup stirred up by traders.