A stock trader’s guide to navigating rare ‘Super El Nino’: 5 sectors to watch as risks buildIn Indonesia, the world’s largest palm oil producer, hotter and drier weather typically reduces yields.
Global production of corn and wheat may also be negatively affected by the weather phenomenon as well as sugar output in Asia.
El Nino has also been globally supportive for soybean output, particularly for major producers in the US and the south of Brazil.
Fertiliser firms could be among the biggest beneficiaries of El Nino if the weather pattern tightens global crop supplies, supporting demand for key nutrients including nitrogen, phosphorus and potassium.
All signs point to a rare El Nino event emerging, creating cooler summer and warmer winter temperatures in the US and thus a bearish natural gas demand environment.
In Asia, higher-than-normal temperatures will boost air-conditioning use and strain power grids when energy prices are already elevated.
Heavier rainfall in parts of South America can disrupt transportation networks and potentially affect mining operations, including copper production in Chile and Peru.
“most US based insurers will benefit from lower claim expense because US hurricanes are a major source of claim costs”. Companies such as Allstate, Progressive and Travelers will likely benefit.
Source: Bloomberg
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