Weathering El Niño

Research evidence excerpt

Weathering El Niño

Global Idea

July 27, 2026 06:00 AM GMT

Morgan Stanley & Co. International plc+MCross-Asset Dispatches Erika J Singh-Cundy

Strategist

Weathering El Niño Erika.Singh-Cundy@morganstanley.comMorgan Stanley C.T.V.M. S.A.+ +44 20 7425-0960

Julia Rizzo

The chances of a very strong El Niño now sit at 81%. History EquityJulia.Rizzo@morganstanley.comAnalyst and Commodities Strategist +55 11 3048-6114

suggests that the impact on global markets is usually limited, Julia Habermann

but the implications look more like a bottom-up story rather Research Associate

Julia.Habermann.Oliveira@morganstanley.com +55 11 3048-6096

than a macro trade, in our view. Sugar, copper, and select EM Morgan Stanley & Co. LLC

credits screen as most exposed to a "super" event. Serena W Tang

Serena.Tang@morganstanley.com +1 212 761-3380

Key Takeaways Simon Waever

El Niño is strengthening, with odds of a very strong event at 81%, according to Strategist

Simon.Waever@morganstanley.com +1 212 296-8101

NOAA; attention now turns to its eventual intensity, duration, and interaction

Morgan Stanley & Co. International plc+

with regional supply chains. Amy Gower (Amy Sergeant), CFA

Among soft commodities, we think sugar has the clearest positive exposure, CommoditiesAmy.Gower1@morganstanley.comStrategist +44 20 7677-6937

while grains could see divergent and partially offsetting outcomes across South

Morgan Stanley & Co. LLC

America.

Emma C Cerda

For global asset prices, history suggests that the impacts of El Niño are limited, Strategist

Emma.Cerda@morganstanley.com +1 212 761-2344

but analysis is challenged by sparse data and confounding macro variables.

From a fundamentals perspective, copper and select EM credits have the clearest Ben Kelson

exposure outside of agriculture to a "super" event.