New Zealand looks to be the best place to hedge impact from severe El Niรฑo shocks to global food supply chains, according to Bank of America. “Historically, El Niรฑo has been associated with widespread crop losses across key exporting regions, and current risks are amplified by elevated fertilizer prices and lingering supply-chain disruptions,” BofA strategist Oliver Levingston said. While aย majorย ElโฏNiรฑoย weather event posed growing risks to the global food supply chains and shortages in fertilizer inputs have been disrupted by the developments in the Strait of Hormuz, New Zealand’s outsized dependence on agricultural exports would mean that a sustainedย trouble for the global foodย supply “is likely to be a positive terms-of-trade shock,” the bank noted. “For New Zealand, whose economy is unusually exposed to agriculture relative to otherย G-10ย markets, the risk is that markets begin pricing a more favorable terms-of-trade outlook, creating an upside risk” for the New Zealand dollar, BofA said, adding it expected the kiwi to see a sharp appreciation.
