Bank of America Global Research sees NZ as best placed to withstand severe El Niño shocks to global food supply chains given its large agricultural output.

"BofA Research and the US National Oceanic and Atmospheric Administration (NOAA) have flagged the mounting risks to global food supply chains posed by a major El Niño weather event (NOAA highest probability: Oct-Dec '26) and Hormuz-driven shortages in fertilizer inputs (nitrogen and sulfur)," BofA notes.

 "A sustained global food supply shock is likely to be a positive terms-of-trade shock for New Zealand (NZ) given its outsized dependence on agricultural exports. We remain short AUD/NZD and forecast a sustained rally in NZD/USD from Q4," BofA adds.