A strengthening El Nino is threatening global agricultural production, pushing commodity prices higher and increasing concerns about food shortages and inflation. The recurring Pacific climate pattern can cause severe droughts, heavy rainfall, and unusually high temperatures across major farming regions. Coffee, cocoa, wheat, rice, sugar, palm oil, and fisheries are among the commodities facing growing risks as adverse weather combines with fertilizer shortages and geopolitical disruptions.
Markets are already responding. Arabica coffee prices have risen roughly 30% since early June, while cocoa futures surged more than 60% between mid-June and early July before retreating somewhat. Analysts at Rabobank believe investors are adding an “El Niño risk premium” to agricultural commodities because of expectations that extreme weather will reduce harvests. Historically, strong events have increased global food commodity prices by around 9%, according to the European Central Bank, although current geopolitical pressures could make the impact larger.
Forecasts suggest the present El Nino could become exceptionally powerful. The US National Oceanic and Atmospheric Administration estimates a 97% probability that it will persist into spring 2027 and an 81% chance that it will become very strong between October and December. This would place it among the strongest events recorded since 1950. At the same time, fertilizer supplies are under pressure from disruptions associated with the Iran war, potentially leaving crops more vulnerable to drought, heat, and excessive rainfall.
Food security consequences could be substantial. The UN Food and Agriculture Organization is particularly concerned about durum wheat production in Australia and rice production in India. Lower fertilizer use combined with extreme weather could reduce yields. The World Food Programme estimates that at least 49 million additional people could face acute food insecurity by the end of 2027.
Several commodities are especially exposed. Cocoa production is concentrated in West Africa, Ecuador, and Southeast Asia, regions historically vulnerable to El Nino. Previous powerful episodes have caused significant cocoa production declines, while current problems include low soil moisture in Ivory Coast and crop disease associated with heavy rainfall in Ghana. Coffee production is similarly threatened, particularly robusta crops in Vietnam, Indonesia, and India. Prolonged drought could empty Vietnamese irrigation reservoirs and damage future harvests.
Sugar and palm oil face additional risks. India has already restricted sugar exports, while Thailand expects a smaller sugarcane harvest area. Indonesia and Malaysia, which produce more than 80% of global palm oil, could experience declining yields as dry conditions reduce soil moisture. Peru has already experienced disruptions to anchovy fishing because unusually warm Pacific waters have affected fish stocks, contributing to soaring fishmeal and fish oil prices.
Climate change could amplify these problems because El Nino now occurs against a warmer global background, increasing evaporation and heat stress. Poor harvests may also encourage governments to impose export restrictions to protect domestic food supplies. Such measures could transform regional production shortages into global supply problems, further increasing food prices and worsening inflation and food insecurity worldwide.
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