The resurgence of El Niño is triggering a surge in global raw materials, which may hit global energy and food in the coming months**, and inflation in Europe and the United States, which has already fallen, is once again threatened to heat up.
Sugar is the most at risk
El Niño is a large-scale ocean-atmosphere interaction that can lead to extreme weather such as droughts and storms, affecting crop yields.
Carlos Mera, head of agricultural market research at Rabobank, said in an interview:
El Niño may have a "sweet tooth,"Everything about sugar will be affected。The **change in sugar** may have been passed on to consumers, and the retail price of chocolate will certainly be substantial**.In its 2024 annual outlook, Rabobank said that drought in El Niño-related Southeast Asia, India, Australia and parts of Africa could lead to the **continuation** of soft commodities such as sugar, coffee and cocoa.
Affected by Florida Extreme Weather and Huanglongbing, 2023,Orange juice** climbed by 80%., which hit an all-time high in late November;Cocoa's ** has soared 64% this year to a 46-year high；In the middle of the month, the Robusta coffee variety hit its highest level in 15 yearsSugar's rise has narrowed since it hit a 12-year high in September, but it is still 13% this year.
Mera said there is a "very clear" relationship between El Niño and sugar prices**, as this weather pattern tends to make weather conditions drier than normal in major sugar exporting countries such as Thailand, India and Australia.
El Niño could send inflation upward
El Niño tends to peak in December, but its effects usually take some time to spread globally.
Morgan Stanley analyst Rajeev Sibal noticed this phenomenon in September, Sibal pointed out that under the continuation of the El Niño phenomenon, global energy and food** will face the impact, of which high inflation and fiscal pressure are the two main risks.
For emerging markets in particular, moving from colder La Niña to El Niño tend to be the most vulnerable to large fluctuations in energy and food** and production, and often have limited fiscal buffers to withstand inflationary storms.
Morgan Stanley warned that El Niño will make the fight against inflation harder, and the Fed's rate hike cycle could last longer as a result.