Stock market winners and losers are already emerging from the next extreme weather cycle

• The market is beginning to price in the effect of the new El Niño weather pattern, Morgan Stanley said.
• It's already sent utilities and chocolate stocks plummeting and insurance stocks soaring so far this year.

The market is beginning to price in the effect of the next extreme weather cycle — and it's sending stocks on diverging paths.

That's because the upcoming El Niño phenomenon has come into clearer focus, allowing Wall Street to predict who the top winners and losers could be. In fact, mentions of "El Niño" in earnings calls are already rising.

"Extreme weather events are broadening and strengthening," Morgan Stanley analysts led by Javier Martinez de Olcoz wrote in a note issued Tuesday. "The micro effects are proliferating, and stocks are diverging. The macro effects have the potential to be inflationary, if increased restrictions through the Panama Canal become more acute."

That's as a parched Panama Canal doesn't have enough water to let as many ships pass through the waterway as it once used to.

Utilities, chemicals, global food retail, and chocolate are four stocks that have been already gutted this year. On the flip side, insurance stocks as well as Brazilian sugar and ethanol producers trading way higher.

Meanwhile, global utilities have more or less traded flat, while freight and shipping stocks have begun falling.

In addition to stocks, commodities like olive oil, cocoa, and orange juice have felt the impact of the forecasts too.

Overall, analysts see crops suffering with the hotter weather. Chocolate is getting more expensive as the holidays approach with dwindling cocoa bean supply and rising cocoa prices.

Grains like corn, wheat, and sugar are also getting pricier, which will hurt Latin American food and beverage companies who rely on those commodities for their products.

"El Niño is confirmed and stronger than normal," Morgan Stanley analysts wrote. "The upstream impact from El Niño is trickling through sectors and supply chains."

Also, when crops hurt, it affects the demand for chemicals like fertilizers.

The impact on utilities is more varied, hurting some parts of the world but benefiting others. In Latin America, more wind and rainfall is great for power generation. In the US, wildfires have led to more power outages.

Meanwhile, insurance companies are seeing higher storm activity in Southern California and drier conditions in the western United States and Australia, which means the reinsurance industry (providers of insurance for insurance companies) will likely get more business.