PRECIOUS METALS | El Niño Forecast to Impact Global Agricultural Supply Chains

According to Jin10, a research report from Huatai Securities indicates that several authoritative meteorological agencies predict the onset of El Niño in 2026. This phenomenon is expected to cause extreme weather patterns, including flooding in the east and drought in the west, potentially disrupting the supply dynamics of major agricultural commodities. Factors such as drought conditions in key production areas of India and Thailand, export bans, and Brazil's energy substitution logic are anticipated to shift the global sugar supply from surplus to slight shortage, strengthening the upward price expectations for sugar. Extreme drought may directly affect the supply chains of palm oil and natural rubber, which are heavily reliant on Southeast Asian production areas. Historical analysis shows that both commodities exhibit strong upward price elasticity during strong El Niño cycles. Soybeans and corn are expected to be marginally affected. The report suggests focusing on the sugar, natural rubber, and palm oil industry chains.