What happened
Morgan Stanley research indicates an 81 per cent chance of a very strong El Niño event this year. Shifting weather patterns threaten crop production in key agricultural regions, with sugar and cocoa expected to see price increases. Additionally, copper mining operations in Chile and Zambia face potential weather-driven disruptions, threatening global supply chains.
Why it matters here
For Australian investors, severe climate events present divergent risks across portfolios. Supply disruptions in soft commodities drive up food inflation globally, potentially keeping central bank interest rates higher for longer, while disruptions in copper production could further tighten refined metal supply and lift base metal prices on the ASX.
What to watch
Official updates from climate agencies on El Niño intensity and commodity price indices for sugar, cocoa, and copper.
Source
thedarksideoftheboom.substack.com