Els, the winner of the 1997 event in Australia, carded a five-under-par 67, to lead on a seven-under-par total of 137 along with Michael Campbell of New Zealand. Campbell, the joint first-round leader, fired a round of 71. Australia's Nick O'Hern and Marten Olander, of Sweden, were a stroke further back after rounds of 71 and 70 respectively.
Meanwhile, Woods, the world No 1, struggled with his short game, with bogeys at three holes. He finished with a four-under-par 72 - three strokes behind the leaders.
"I held it together but was struggling with the putter and did well to fight back to even for the day," said Woods, who is coming off a record- equalling four consecutive tournament wins and eight victories in his last 11 appearances. "It was a difficult day," he added, saying that he felt tired and had been thrown off by the varying weather conditions, which included light rain and sunshine.
The tournament seemed to be shaping up like a replay of the start of last year's Classic in Thailand, where Woods fell eight strokes behind Els. On that occasion the 23-year-old American surged back to win the play-off.
"Tiger is the best golfer in the world by far. He had a pretty mediocre day," Els said. "If I can score under 70 for the next couple of days, then they'll have to come out and catch me."
Other big names were also struggling, including Fiji's Vijay Singh, England's Nick Faldo and the American Jim Furyk, who were all a long way down the field of 132.
O'Hern, however, said he expected the big guns would begin to dominate after the cut. "After a couple of days, they're still adjusting to the conditions of the course," the 28-year-old said.
In Japan, Lee Westwood and Darren Clarke are two shots off the lead at the Taiheiyo Masters in Gotemba. Westwood completed a second-round 70 while the Ulsterman recorded a 71 to add to his opening 66.
Katsuyoshi Tomori holds the lead after a round of 66, lying one shot clear of his compatriots Naomichi Ozaki and Hirofumi Miyase. Scotland's Andrew Coltart and England's David Howell made the cut after second successive rounds of 72.
They have joined the young Spaniard Sergio Garcia on 144 after the 19- year-old's second-round 73. But his fellow Spaniard Jose Maria Olazabal could only manage a second-round 77 and misses the cut.Reuse content