Why Indian farmers, three million brides and El Nino all pose threat to Aussie exports
Farmers in India were likely to impact the price Australian mining companies received for gold as the looming El Nino weather event was predicted to significantly impact the resources sector.
epa05884068 Indian brides of Jain community adjust their jewellery as they take part in a mass marriage ceremony under Mukhyamantri Kanyadan Yojna (chief minister welfare scheme) organized by the Late, Babulal Pradhan Memorial Trust in Bhopal, India, 02 April 2017. More than 15 Jain couples tied up the nuptial knot in the marrriage ceremony. EPA/SANJEEV GUPTA
A report from ANZ said the El Niño, which was likely but not yet formally declared by the Bureau of Meteorology, threatened the already uncertain outlook for commodity markets.
Coal and gas, two major exports from Queensland, along with gold and copper, were all likely to be affected while carbon emissions could rise because of the likelihood of more bushfires.
“Demand for gold could be impacted as lower revenue from reduced crops keeps India’s farmers hands in their pockets,” ANZ said, pointing to the Indian wedding season, which runs between November and February, when there is a rush for gold. More than 3 million weddings occurred during this period in 2022.
The El Niño typically brings drought to the western Pacific, rains to the equatorial coast of South America and storms and hurricanes to the central Pacific. Europe’s winter can be colder and drier in the north and wetter in the south.
Indonesia and Australia, two of the world’s biggest coal exporters, would be hotter as would Canada and the northern US, but the Gulf Coast and south-east of the US would be wetter than usual.
“As such we are likely to see warmer and drier weather in Europe and Asia. This will further pressure the energy markets in the short term. Coal and gas consumption is expected to rise,” ANZ said.
“We expect an increased level of disruptions to supply the metal markets. Copper from South America is the most exposed. Aluminium supply in China is also at increased risk of disruption.
“The biggest impact tends to be on agriculture, as droughts in Asia and Monsoons in India impact crop yields. Energy supply can also suffer as higher temperatures in Asia and Europe put a strain on power networks.”
Previously, China has ordered heavy industry to reduce power consumption because of energy shortages and ANZ said there were already curbs in electricity supplies in Sichuan province with temperatures above 35 degrees. China’s hydro producers were also hit by water shortages.
“China’s only real option in the short term is to revert to coal-fired power which has led to a surge in coal imports,” the bank said.
