Commodities
The risk of a “super El Niño” represents a meaningful threat to agricultural markets. Wheat, cocoa, and palm oil appear particularly vulnerable to El Niño-related supply disruptions.
A rise in food prices could also generate political — and potentially geopolitical — reverberations across frontier and emerging markets, where food prices are far more relevant than in developed economies.
Copper prices are surging again after a brief pullback in the first quarter.
What is driving the renewed strength, and can it persist?
In this month’s Beta Report, we assess what that structural tension means for investors under two distinct scenarios. In our base case – a multipolar world order – Australia's position turns out to be more advantageous than it appears. The great power capital expenditure race generates demand for precisely what Australia produces. In the tail risk – a hard bipolar rupture – the calculus inverts, and the same commodity dependencies that long appeared as structural strengths begin to look like structural liabilities.
Hopes for an imminent Middle East de-escalation have capped oil prices in recent weeks, but that restraint may soon fade.
