CICC has released a research report maintaining its judgment that U.S. natural gas fundamentals will remain tight in 2026, expecting the off-season fluctuation range for NYMEX gas prices to shift upwards to $4-5/MMBtu. Although Europe experienced a warm winter, natural gas inventories are at low levels, and restocking demand will provide support to the global LNG market. Against the backdrop of significant increases in global LNG supply, CICC maintains its view of a downward trend in the European gas price center, forecasting the Dutch TTF gas price center to decline to $9-10/MMBtu during the 2026 off-season. Furthermore, attention should be paid to the potential impact of summer hurricanes on oil production and refining in the Gulf of Mexico.
CICC stated that in December 2025, as the world welcomed the New Year, the La Niña climate phenomenon had quietly completed its sixth visit—officially marking the fifth La Niña event in the past six years. Although meteorological departments predict this La Niña will be relatively weak and short-lived, against a backdrop of major power competition and rising resource nationalism, weather changes are injecting more uncertainty into commodity pricing. The entanglement between the global commodity market and climate fluctuations has always been a history of the game between "nature and the industrial chain."
Looking back over the past decade, each occurrence of extreme weather has impacted the commodity market through the chain of "supply disruption - price anomaly - equilibrium reshaping." For instance, the strong El Niño of 2015-2016 caused drought and palm oil production cuts in Southeast Asia, driving palm oil prices up by over 50%. During the 2020-2021 La Niña cycle, the North American cold wave impacted shale oil production capacity, causing WTI oil prices to break through阶段性 highs, while frost in Brazil's main coffee-producing region led to NYBOT futures prices surging over 100% annually. The drought in South America at the end of the 2022-2023 La Niña caused Argentina's soybean production to drop by over 50%, pushing up the global soybean meal price center.
CICC believes that climate shocks are often "gray rhinos" embedded in global supply chains. In 2026, the narrative of climate disruption is undergoing more complex changes. Since the beginning of the year, La Niña has become active again, while the probability of an El Niño occurring in the second half of the year has climbed to 60%. When the "twin-peak climate" (alternating or overlapping La Niña and El Niño) coincides with a rising trend of global trade protectionism, the destructive power of weather risks may also be amplified.
In recent years, with the EU's Carbon Border Adjustment Mechanism (CBAM) expanding carbon tariffs on steel and aluminum, the U.S. Critical Minerals Security Act increasing localization requirements for key mineral resources like lithium, cobalt, and nickel, Chile's policy of imposing surtaxes on copper exports, and Indonesia's export quota system for nickel ore—when the "uncertainty" of natural climate collides with the "rigid constraints" of man-made policies—the commodity market in 2026 has entered a new phase of "nested risks."
Weather Outlook: A weak La Niña is currently established, potentially turning neutral in the second quarter; climate pattern shifts this summer may exacerbate weather risks. NOAA monitoring data shows that equatorial Pacific sea surface temperatures have stably fallen below the La Niña threshold, officially marking the establishment of a weak La Niña event for the 2025/26 winter. According to mainstream model predictions, this event is relatively weak and short-lived, expected to transition to a neutral state by the spring of 2026. Against the backdrop of global warming, the cooling effect brought by this La Niña may be insufficient to cause widespread cold winters. However, it still exerts typical influences on global circulation and has already triggered unconventional precipitation anomalies in some regions.
Looking medium to long-term, sunspot activity has entered a downward cycle; historical patterns suggest this may increase the frequency of switches between El Niño and La Niña events over the next 3-5 years, thereby elevating extreme weather risks. Current models already indicate a significantly increased probability, over 60%, of the climate state shifting to El Niño in the third quarter of 2026, necessitating continuous monitoring of its development and potential impacts on commodity supply and demand.
Commodity Impact: Divergent pathways of weather disruption; varying focal points across sectors. As a key disruptive variable in the commodity market, weather is prompting supply and demand adjustments simultaneously in core sectors like energy, metals, and agricultural products. However, the underlying logic and core concerns exhibit a distinct characteristic of being "in sync" but not "in harmony"—each sector may focus on temperature fluctuations or closely monitor precipitation changes, with differing dimensions of concern and impact pathways.
Specifically: Energy: Temperature is the core driver. Last November-December, North American heating demand drove natural gas prices higher. In early 2026, the deviation of U.S. natural gas inventories from the five-year average was revised down to approximately 1.2%, lower than the 4.5% before the start of the heating season. Higher-than-seasonal inventory drawdown during the peak season may provide a favorable starting condition for an upward shift in the off-season price center. CICC maintains its judgment of tight U.S. natural gas fundamentals in 2026, expecting the NYMEX gas price off-season fluctuation range to shift upwards to $4-5/MMBtu. Although Europe experienced a warm winter, low natural gas inventories mean restocking demand will support the global LNG market. Amid significant global LNG supply growth, CICC maintains its view of a downward trend in the European gas price center, forecasting the Dutch TTF gas price center to decline to $9-10/MMBtu during the 2026 off-season. Additionally, attention should be paid to the potential impact of summer hurricanes on oil production and refining in the Gulf of Mexico.
Non-ferrous Metals: Precipitation is a key variable. Heavy rainfall may disrupt production and transportation in major mining areas in Indonesia (copper, nickel, bauxite) and South America (copper, lithium salt lakes), pushing up mine disruption rates and costs. Concurrently, La Niña may affect aluminum prices through power costs. Data backtesting shows that typically during La Niña winter years, precipitation in the upper reaches of the Yangtze River and Yunnan, China, tends to be lower, potentially reducing hydroelectric power generation and driving up local costs for hydro-powered aluminum smelting. In the Northern Hemisphere, it may intensify cold winter weather, increasing energy consumption and pushing up electricity and gas prices, thereby also driving up costs for European electrolytic aluminum.
Ferrous Metals: Both temperature and precipitation offer trading value. Historical experience shows that electricity consumption in winter and summer often correlates strongly with temperature conditions. This year's warm winter may suppress domestic coal consumption for heating, leaving little room for coal price performance. Regarding precipitation, increased rainfall in northeastern Australia may affect coal shipments, while the impact of Brazil's rainy season on iron ore production may show regional variations under the La Niña background. Under this year's weak La Niña, overall shipment trends are expected to remain strong.
Agricultural Products: Hydrothermal conditions most directly affect fundamentals, but weather impacts vary by crop. For soybeans, Brazilian soybean yields are sensitive to precipitation, but hydrothermal conditions during this year's Brazilian soybean growing season have been generally favorable, with minimal impact from the weak La Niña, leading to strong expectations for a bumper Brazilian harvest. The market focus has shifted to the concentrated South American marketing period and the competitive export landscape with U.S. soybeans. CICC maintains its view that this may cap the upside for international soybean prices in the short term, holding its forecast at 1000-1150 cents/bushel.
For palm oil, the current weak La Niña has limited impact on Southeast Asian production. Market trading focus is concentrated on the interplay between high Malaysian inventories and expectations for good Ramadan stocking demand. CICC maintains its view of looking for opportunities to go long on palm oil prices on dips in the first half of 2026. Medium to long-term, the probability of an El Niño occurring in 2026 is偏高. Through data backtesting, CICC found that a winter El Niño can significantly suppress palm oil yields. Following four strong El Niño events since 1970, the average decline in Malaysian oil palm fruit yields was significant, at 12%, 24%, 14%, and 15% respectively. Vigilance is warranted regarding the lagged减产 effect of El Niño on palm oil production in 2027.
For winter wheat, late sowing this year has resulted in weaker seedling conditions. Coupled with potential risks from winter cold waves or spring droughts associated with La Niña, this poses challenges for achieving a bumper harvest in the new season.
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