Global weather agencies have upgraded their outlook for the upcoming El Niño, indicating a greater than 90% chance of a very strong event during the northern‑hemisphere fall and winter of 2026‑27. While El Niño is a natural cycle that repeats every two to seven years, this iteration is expected to bring above‑average heat and shifting rain patterns that could hit several key soft‑commodity markets.
What is El Niño?
El Niño occurs when trade winds weaken, allowing warm water to pool in the eastern Pacific. The result is a worldwide shift in temperature and precipitation: hotter, drier conditions in parts of South and Southeast Asia, Australia and Southern Africa, and heavier rains in southern South America and the United States. The U.S. Climate Prediction Center now projects a very strong El Niño for the coming months.
Cocoa: West Africa Faces Dual Threats
Investment firm WisdomTree notes that every strong El Niño in the past 55 years has reduced cocoa output. During the moderate‑to‑strong El Niño of 2023‑24, West Africa first received double its normal rainfall, creating conditions for a fungal disease that weakened cocoa trees. Later, unusually dry Harmattan winds and intense heat caused those weakened trees to drop their flowers, further lowering yields.
Jim Roemer of Best Weather warned that many still assume El Niño only brings drought to West Africa, but climate change can also produce excessive early rain, which he cites as his biggest concern. Ivory Coast and Ghana together supply about half of the world’s cocoa beans, while Ecuador, the third‑largest producer, typically sees excess rain during El Niño events. Cocoa prices surged to over $12,000 per metric ton in late 2024 after the West African harvest faltered.
Robusta Coffee: Heat and Dryness Threaten Vietnam and Indonesia
El Niño’s higher temperatures and reduced rainfall pose a particular risk to robusta coffee, which is grown primarily in Vietnam and Indonesia—countries that together account for roughly 50% of global robusta output. Analysts at Citi say that dryness during the crop‑development phase could significantly trim yields, with the impact felt in the fourth quarter harvest.
For arabica coffee, which is largely produced in Brazil, the picture is mixed. Carlos Santana of trader ECOM’s subsidiary EISA notes that early‑season higher temperatures could protect the current harvest from winter frosts, but the typical dry, hot conditions expected later in the year could hurt the next‑year crop, potentially reducing output in 2027.
Sugar: Diverging Effects Across Continents
El Niño usually brings excess rain to Brazil’s sugar‑cane regions in the second half of the year, which can disrupt harvest quality. Conversely, India and Thailand—ranked second in global sugar production and export, respectively—often experience reduced monsoon rainfall during an El Niño. India’s 2026 monsoon is projected to be the lowest in 11 years, with rainfall at only 90% of average during the critical June‑September development period.
Carlos de Mello, head of sugar at Hedgepoint, estimates that even a moderate El Niño could shave about 1 million metric tons from India’s output. While Brazil may see a short‑term dip, the extra rain could benefit its 2027 crop, making a bullish outlook for Brazil’s sugar market unlikely.
What This Means for Farmers and Consumers
Farmers already coping with higher fertilizer and diesel costs—spurred by the ongoing U.S.–Israeli conflict with Iran—may face additional pressure from weather‑related yield reductions. Consumers could see higher prices for chocolate, coffee and sugar as supply tightens.
Stakeholders across the supply chain are advised to monitor weather updates closely and consider hedging strategies to mitigate potential price volatility.
Original reporting: Appleton, WI News Feed (HLL/CB) — read the source article.
