The return of El Niño likely to cause issues for commodity markets – ANZ
|The emergence of an El Niño weather event threatens to disrupt the already uncertain outlook for commodity markets, economists at ANZ Bank report.
El Niño is expected to increase demand for electricity
An El Niño typically brings drought to the western Pacific, rains to the equatorial coast of South America, and storms and hurricanes to the central Pacific. As such, we are likely to see warmer and drier weather in Europe and Asia. This will put further pressure on energy markets in the short term. Coal and Gas consumption is expected to rise.
We expect an increased level of disruptions to supply in the metals markets. Copper from South America is the most exposed. Aluminium supply in China is also at increased risk of disruption. On the flip side, demand for Gold could be impacted as lower revenue from reduced crops keeps India’s farmers hands in their pockets.
We could also see increase levels of carbon emissions brought about by increased fires and higher power consumption. Any potential pick-up in demand for carbon credits from industrial users and consumers could be offset by stronger renewable energy generation.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.