El Niño and Commodity Prices

Below is a very good video from The Economist outlining the effects of the El Niño weather pattern. It was first called El Niño – the boy (Jesus) – by Peruvian fisherman over a century ago because it became noticeable at Christmas time.

In parts of south east Asia, southern Africa and Australia it produces drier-than-average weather and even droughts. Research has shown that El nino tend to reduce global cocoa production by 2.4% which can lead to a price rise of almost 2%.

In South America heavy rain could threaten zinc, nickel and copper supply. Drought in South East Asia could lead to power shortages and higher prices in those countries that rely on hydropower.

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