The looming specter of a "super" El Niño, a formidable weather phenomenon, casts a long shadow over the global economy, particularly the food sector. This year's El Niño, with its unprecedented potential to intensify heatwaves, flooding, and stormier weather, could be a game-changer, exacerbating existing challenges and potentially causing a global food price shock that lingers until 2028. As if the Iran war's impact on food prices wasn't enough, this super El Niño could be the final straw, pushing the world's food supply chains to the brink.
What makes this situation particularly fascinating is the historical context. El Niño events have a long history of wreaking havoc on harvests and food supplies. Over a century ago, a severe El Niño caused catastrophic droughts across China, southern Africa, Brazil, Egypt, and India, leading to famine conditions and millions of deaths. Fast forward to the present, and the potential for a "super" El Niño in 2026-27 could be even more devastating, with a 63% chance of sea surface temperatures exceeding 2C above normal, according to the US National Oceanic and Atmospheric Administration (NOAA).
In my opinion, the implications of this are profound. The naturally occurring phenomenon has a history of affecting harvests and the food supply network, and the potential for a "super" El Niño could be a game-changer, exacerbating existing challenges and potentially causing a global food price shock that lingers until 2028. The prospect of a renewed inflation shock is also rattling central banks, adding to concern that interest rates could be kept at elevated levels. As the Italian bank UniCredit notes, "El Niño puts ‘climateflation’ back on the agenda."
One thing that immediately stands out is the potential impact on global food commodity prices. According to analysts at Goldman Sachs, the strength of this El Niño could cause a 15.8% surge in global food commodity prices, with a knock-on effect worldwide, including for consumers in Europe, where it predicted food prices could rise by 1.3% across the eurozone. However, the full effect will take time to materialize, with the consequences potentially taking until the second half of 2028 to be "fully realized."
What many people don't realize is that the impact of El Niño is not uniform across the globe. It reshapes global rainfall and temperature patterns, creating regional winners and losers. Some regions could stand to benefit from warmer weather conditions, while others could face devastating droughts and flooding. In India, for example, El Niño has already begun to affect crops, driving a drier monsoon season with some regions experiencing only 25% of their usual rainfall, which could affect supply for wheat, rice, and sugarcane.
If you take a step back and think about it, the implications of this are far-reaching. The impact of El Niño is likely to be felt across the world, with droughts in southeast Asia affecting palm oil supply and harvests of coffee and cocoa potentially being affected. Warmer, wetter conditions could also exacerbate the spread of disease, hitting crop yields in future years. In North America, the impact of El Niño is strongest in the winter, and while conditions in Europe can be influenced by the weather event, other factors such as the effect on global food prices will be where it is felt.
A detail that I find especially interesting is the potential for El Niño to compound the disruption caused by the Iran war. By adding food supply chain woes to already higher prices and shortages of fertilizer and energy supplies, El Niño could exacerbate the challenges facing the world's food systems. As UBS analysts note, "Even modest supply disruptions could trigger large price moves than historical patterns could imply."
In conclusion, the potential for a "super" El Niño in 2026-27 is a cause for concern, particularly for the global food sector. The implications of this are far-reaching, with the potential for a global food price shock that lingers until 2028. As the world grapples with the challenges of climate change and geopolitical tensions, the impact of El Niño could be the final straw, pushing the world's food supply chains to the brink. This raises a deeper question: how can we better prepare for and mitigate the effects of such extreme weather events on our food systems?
