Barclays Warns: El Niño Could Drive Palm Oil and Rubber Prices Up 40%
nashnova research
Barclays warns a potentially record-breaking El Niño is forming and could push palm oil and natural rubber up 40% over the next 18 months, with supply shocks lasting longer than the market expects.
Which commodities face the biggest hit?
Barclays sees palm oil and natural rubber leading the surge — up as much as 40%.
Robusta coffee follows at roughly 30%.
Industrial metals copper and aluminium could rise about 20%.
This means → farm commodities are far more exposed than metals — they depend directly on weather and have less supply flexibility.
What makes this El Niño different?
Barclays believes this cycle could break historical records, qualifying as an "extreme" event.
In plain terms = El Niño — a global climate chain reaction triggered by abnormal warming in the Pacific — is not rare, but an "extreme" grade means droughts and floods far beyond a normal cycle.
The impact window stretches roughly 18 months, not one or two quarters.
Why could the supply shock last longer than expected?
The core risk: multiple major producing regions across Southeast Asia may face drought at the same time.
This means → damage goes beyond the current harvest — drought also stunts trees and crops still growing, dragging next year's output down too.
This reflects a gap in market pricing: traders may be discounting only a single-season shortfall, while the actual shock could be multi-year.
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