El Nino Heating Up Commodity ETF Impacts

Dry weather in West Africa and problems with the cocoa harvest also boosted the iPath Bloomberg Cocoa Subindex Total Return ETN (NYSEArca: NIB) and iPath Pure Beta Cocoa ETN (NYSEArca: CHOC), which rose 10.3% and 3.9%, respectively, over the past three months.

Lower precipitation and droughts across Australia could decimate wheat and other crops. The Teucrium Wheat Fund (NYSEArca: WEAT) is the only ETF to track wheat price movements. WEAT was down 5.9% over the past three months.

The dry weather could also mean less water to run hydro-powered mining equipment in Indonesia, the largest nickel producer in the world. The diminished production would affect nickel exchange traded notes, including the iPath Bloomberg Nickel Subindex Total Return ETN (NYSEArca: JJN) and iPath Pure Beta Nickel ETN (NYSEArca: NINI), which have fallen off 17.3% and 16.7, respectively over the past three months. Weakness in the global economy, notably from China, may have weighed on demand for industrial metals.

Below-average rainfall in coffee-growing Vietnam, Indonesia and Central America could lower crop yield expectations. Warm weather could reduce the risk of frost in Brazil, the largest coffee producer in the world, and could diminish crop output as well. The iPath Bloomberg Coffee Subindex Total Return ETN (NYSEArca: JO) and iPath Pure Beta Coffee ETN (NYSEArca: CAFÉ) track coffee prices. Over the past three months, JO declined 18.9% and CAFE fell 16.8%.

Lastly, wetter conditions in Chile, the world’s largest copper producer, could lead to flooding in copper mines, which would impeded supply. For copper exposure, look to the iPath Bloomberg Copper Subindex Total Return ETN (NYSEArca: JJC), iPath Pure Beta Copper ETN (NYSEArca: CUPM) and United States Copper Index ETF (NYSEArca: CPER). Over the past three months, JJC dipped 10.9%, CUPM was up 0.2% and CPER was 9.0% lower.

For more information on the commodities space, visit our commodity ETFs category.

Max Chen contributed to this article.