This year’s (2026-2027) El Niño weather phenomenon can significantly affect global commodities, and food price inflation can be expected, especially if it is confirmed to be what is commonly known as a ‘Super El Niño’.
While most of the mainstream media’s focus is on the devastating consequences of the Super El Niño phenomenon, it is worth noting that it will have a large but also highly varied economic impact across different regions. There are both winning and losing countries – and by extension, agricultural commodities – from an El Niño event.
El Niño is defined as a periodic warming of sea surface temperatures in the central and eastern Pacific Ocean, which typically lasts between nine and 12 months, according to the World Meteorological Organization (WMO). This generally leads to above-average temperatures in most parts of the world from June to August. The WMO said it is likely that this year’s El Niño will continue beyond that. The National Oceanic and Atmospheric Administration (NOAA) has even said that it gives this year’s El Niño a 96% chance of persisting through the December-February period. This would make a large difference in various crops.
Still according to the WMO, there are high expectations for increased rainfall in southern South America, the southern US, parts of the Horn of Africa, and central Asia, as well as possible drought in Australia, Central America, Indonesia, and sections of southern Asia, with also a strong probability of hurricanes in the central and eastern Pacific Ocean.
Photo Credit: NOAA
The higher temperatures and droughts predicted for the Northern Hemisphere this summer, or the wetter-than-normal weather during the Southern Hemisphere summer (Northern Hemisphere winter), particularly off parts of both the Northern Pacific coast and Southern Atlantic Coast of South America will be crucial to monitor, said Philip Manamel, Director of Fundamental Analysis at Expana.
Southern Hemisphere
For example, Brazil may see a warmer-than-usual Southern Hemisphere winter, reducing frost risk. Indonesia, meanwhile, will be what Manamel describes a “mixed bag,” as a dry June-August can cause material problems, but if Indonesia gets through that window without too many problems, then once the rains return, drier weather at the peak of the wet season in December-February can be positive for some crops (like coffee), given the volume of rainfall that normally falls in that period, Manamel argued.
In his view, Ecuador, Colombia, and Peru will be key countries to watch longer term, in the December 2026 – February 2027 period. El Nino conditions in these countries typically lead to excess rainfall. If conditions should persist throughout the critical December-February growing period, we may see excess rainfall materially and negatively affect the region’s 2026/27 cocoa production.
There are also expectations that El Niño will bring drought to West Africa’s cocoa producing areas. Zooming in on the Côte d’Ivoire, Moriarty pointed out that the country’s main growing regions received light rainfall in May, but it did not help the ongoing soil moisture situation. Regardless of the El Niño impact in the coming few months, the current mid-crop is nearly complete, and will be fully harvested by July. As a result, the mid-crop output is largely determined, he said. The risk therefore falls more on the 2026/27 main crop, which may be delayed at onset, he added.
In Argentina, El Niño is generally associated with above-average seasonal rainfall. “Soybean and corn production can therefore potentially benefit from this weather phenomenon, depending on whether it occurs during the growing season or not,” said Benoit Fayaud, Senior Manager of Grains and Oilseeds at Expana. In Argentina, most corn and soybeans are sown between November and December and harvested from March to June. The coming ‘super El Niño’ could therefore occur right in the middle of the growing season. History shows that soybean yields generally increase by 10-15% above average during El Niño periods, whereas in a standard year, or during La Niña, yields may range from -20% to +10%. The picture is more mixed for corn with an increase in yield of 10- 60% during an El Niño period compared to the average, while in other periods yield can vary from -20% to +40% versus the average.
Northern Hemisphere
In the US, El Niño typically brings wet weather to California (benefiting various crops), warmer winters in the Northeast, increased rainfall in the South, diminished tornado activity in the Midwest, and a decrease in the number of hurricanes that hit the east coast. In May, NOAA had already forecasted a below-average hurricanes season in the Atlantic Ocean, with 3-6 hurricanes compared to the historical average of 7.
According to Nick Moss, Market Reporter – Nuts, at Expana, for almonds and other tree nuts in California, the benefit of wetter weather depends on timing. “Increased precipitation during the winter can be beneficial to orchards rebuilding soil moisture while trees are dormant and recovering. It also could aid in recharging reservoirs and aquifers that are used during in-season irrigation.”
However, there are risks too as extreme heat at the end of crop development can stunt yields, Moss warned. “Harvest typically runs from August through October/early-November. Rains during that time can prolong the process, increase operation costs, and harm quality. On the other end, if the wetter pattern sets in or persists into February/March, there can be adverse effects on pollination,” he said.
Canada typically enjoys warmer weather in an El Niño year, and in turn a greater return from its fisheries.
However, Josh Bickert, Market Reporter for Seafood at Expana, warned that warmer water temperatures create more ideal environments for algal blooms. West Coast Canadian Salmon, for instance, can be impacted by harmful blooms that can cause fish mortalities. Moreover, “there is risk management or early harvesting which leads to an influx of supply on smaller fish while the market contracts months later, leading to less availability when the fish is due to mature and be harvested,” he said.
The 2023-2024 El Niño was regarded as the fifth-most powerful El Niño–Southern Oscillation event in recorded history. It contributed to making 2024 the hottest year on record. This year’s El Niño-driven weather disruptions will likely deal another blow to markets already grappling with fertilizer and diesel shortages caused by the Iran war.
Markets are, however, waiting to see how crops may be impacted and what role El Niño really plays in upcoming months and for the full 2026/27 crop year. Additionally, a number of economies that are not directly affected by El Niño could benefit from the shock, mainly due to positive indirect spillovers from commercial trade and financial market links.
This article was also co-authored by Philip Manamel, Director of Fundamental Analysis at Expana.
Written by Simon Duke, Andrew Moriarty, Nick Moss, Josh Bickert, Benoit Fayaud and Ryan Gallagher
