Mexican Child Ready To Wreak Havoc…
Don’t look now, but an angry Mexican child is ready to turn the commodities world on its ear.
What the heck am I talking about?
El Niño…
In case you’re unaware, El Niño translates into “Mexican child”. Of course, in this instance, I’m referring to the abnormal ocean pattern forming in the Pacific Ocean known as El Niño.
Scientists predict an El Niño is a near certainty to develop over the next 6-12 months. In fact, the Australian Bureau of Meteorology just upped the odds of the weather anomaly occurring to 75%- up from 50% a few weeks ago.
What exactly is an El Niño?
Let me explain…
An El Niño is the gradual warming of Pacific Ocean surface temperatures off the coast of South America. Scientists aren’t quite sure why this phenomenon occurs every few years, but when it does, strange things happen to the world’s weather patterns.
Some regions see a drastic increase in rainfall, while others experience drought. The effects of El Niño typically last nine months to two years.
What does EL Niño have to do with commodities?
When these troublesome weather patterns develop, they have a tendency to damage crops in many of the world’s agricultural regions. In fact, the last major El Niño in 1997-1998 caused billions of dollars worth of crop damage in the US alone.
And commodity experts suspect the same thing this time around. The US typically receives above average rain during El Niño patterns. While it will likely help alleviate the US drought situation, too much rain can hinder harvesting operations.
And that’s not all…
The Australian Bureau of Meteorology predicts below average rainfall will consume the western Pacific and Indonesian regions. What’s more, drought is expected in Western Africa and Australia.
As you may know, these are key production regions for some important agricultural commodities.
Commodity producers in these areas are already having problems keeping up with global demand. When the specter of El Niño is added to the mix, commodity prices could really go haywire over the next year.
How can you capitalize on the situation?
Unfortunately, I can’t tell you here. But what I can tell you is subscribers to my flagship commodity ETF investing service, the Commodity ETF Alert, are positioned perfectly for the potential upheaval in Ag commodities.
The good news is, the commodity that’s most likely to rally off El Niño is still below our maximum buy-up-to-price.
That means you can still get in on this trade at a fair price.
If you’d like to discover how to profit from various commodities, without risky futures contracts, click here.
Until Next Time,
Justin Bennett
Category: Commodities
