JPMorgan Warns 'Super' El Niño May Drive Global Food Inflation
JPMorgan warns that a 'super' El Niño could drive up global food inflation. The bank estimates that the super El Niño alone could raise the peak of global food inflation by about 0.7 percentage points, and if combined with energy price shocks, the impact could expand to 1.3-1.5 percentage points, dragging down overall inflation. Event-driven agricultural products and inflation expectations are being repriced, with funds flowing into food-related commodities and hedging tools, benefiting agricultural inputs and exporting countries, while pressuring emerging market consumption and central bank easing pace. Source: Public information
ABAB AI Insight
JPMorgan has been continuously tracking the transmission of climate and geopolitical factors on commodities. This time, it places the probability of a super El Niño at a high level and quantifies its cumulative effect on food inflation, continuing its practice of incorporating weather shocks into macro models. On the capital path, the report guides clients' allocations through publicly quantifying risks, motivated by the need to reflect the dual impact of climate and energy shocks on the inflation path by 2027, while consolidating its forward-looking position in macro research. Comparing the impact paths of strong El Niños in 2015-16 and 2023-24 on agricultural prices, global food inflation is currently in a phase of observation from moderation to potential re-acceleration. Essentially, this represents a transfer of pricing power: climate anomalies are re-dominating food prices through supply chain disruptions, with the mechanism being that drought and abnormal rainfall combined with energy costs shift inflation pressure from core services to food, extending the central bank's tightening or cautious cycle. ABAB News · Cognitive Laws 1. The real destructive power of climate shocks lies in their combination with energy. 2. Risks with a high probability are most easily underestimated by the market. 3. Food inflation is the most politically significant variable that emerging markets cannot ignore.