Areas of China have been inundated by a monsoon, bringing massive rainstorms and creating extreme flooding.
The South China Morning Post reported this week on a natural gas pipeline explosion and several roads collapsing due to heavy rains in parts of Yulin, a city in China’s northwestern Shaanxi province. Authorities are evacuating residents from the area.
“Based on our research, we are thinking 10% to 15% of overall ag production could be impacted by the flooding,” says Brian Splitt, a technical analyst with AgMarket.net.
The Guardian reported some places have recorded more than double the normal amount of rain through June and July as the active monsoon has put water pressure on the Three Gorges dam and the millions of people who live downstream in towns such as Wuhan.
“The one thing I would say with confidence is if something happened with the dam, we’d see market volatility increase substantially at that point,” Splitt says.
There could be flooding in metropolitan areas, which could create manufacturing problems, he adds.
“This could potentially be another black swan in 2020 where equity markets are going to be riled by that,” Splitt says. “[We] could have implications on currency as well.”
Watch his analysis here.