Five times in six years! La Niña is back, and the global agricultural supply chain will be impacted.

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A new round of La Niña is forming—this is the fifth occurrence in the past six years.

Recently, frequent floods in Asia and early blizzards in many parts of the United States have become signals of the return of La Niña. This cyclical cooling phenomenon in the Pacific Ocean will disrupt global weather systems and pose significant risks to agriculture, energy markets, and supply chains.

For the markets, the return of La Niña means a new round of uncertainty. According to data from reinsurance broker and data analysis company Aon, in recent La Niña years, the resulting global economic losses have ranged from $258 billion to $329 billion. Extreme weather is becoming an increasingly important factor in driving up economic losses and influencing decision-making in the insurance, agriculture, and energy industries.

At present, markets are closely watching its potential blow to global major crop yields, as well as its boost to winter energy demand in the Northern Hemisphere. Although meteorologists predict that this round of La Niña will be relatively weak and may soon reach its peak, its impacts are expected to last for several months, adding variables to commodity price trends.

La Niña refers to the phenomenon of large-scale, sustained abnormal cooling of sea surface temperatures in the eastern and central equatorial Pacific, accompanied by changes in tropical atmospheric circulation, including alterations in wind, air pressure, and rainfall patterns. 

Frequent Extreme Weather, Huge Economic Losses

The impacts of La Niña have already become evident. According to data compiled by Bloomberg, floods in Vietnam and Thailand in November to December have resulted in at least 500 deaths and over $16 billion in economic losses. Researchers from the World Weather Attribution noted that not all disasters are directly linked to La Niña, but the pattern is consistent with its historical behavior.

"La Niña's contribution to abnormal rainfall in Southeast Asia is taking lives and damaging infrastructure," said Bill Hare, CEO of Climate Analytics.

Historical data shows that La Niña is often associated with droughts in California, USA, and in Argentina and Brazil, as well as increased hurricane activity in the Atlantic. For example, the Helene hurricane that caused more than 250 deaths in the southern US in 2024 may have been fueled by La Niña.

Uncertainty in Agricultural Markets

Global agricultural markets are on high alert. According to research published in the journal Environmental Development, La Niña is usually linked to reductions in the yields of corn, rice, and wheat.

• Americas: As the world's largest soybean exporter, Brazil is wary of the risk that La Niña may bring reduced rainfall to its southern growing regions. Meteorologist Marco Antonio dos Santos noted that current forecasts show irregular rainfall in the south-central part of the country.
• Asia: Luiz Roque, market intelligence coordinator at Hedgepoint Global Markets, said that below-average temperatures in China may threaten winter wheat production. In Southeast Asia, according to Kang Wei Cheang, an agricultural broker at Singapore's StoneX Group Inc., heavy rainfall may disrupt palm oil harvests and transportation, though increased moisture could benefit crop recovery in 5 to 12 months.

Winter Energy Demand in the Northern Hemisphere May Rise

La Niña typically brings colder winters to parts of North America and East Asia, thereby increasing demand for heating fuels.

In the US, La Niña usually leads to lower temperatures and more snowfall in western Canada, the Pacific Northwest, the northern Rockies, and the Great Lakes region. This year, Chicago already recorded its snowiest single day in November on record. Paul Pastelok, a long-range forecaster at AccuWeather Inc., said La Niña is "fueling" cold and snowy weather in the northern US. This pattern also applies to northern China and Japan, possibly leading to higher energy consumption and putting pressure on utilities.

A New Normal under Climate Change?

Five La Niña events in six years are part of a broader trend in which La Niña has been more common than El Niño over the past 25 years. Michelle L’Heureux, a forecaster at the U.S. Climate Prediction Center, pointed out that scientists are still studying this shift; some believe climate change may be impacting the cycle, while others attribute it to natural variability.

Bill Hare emphasized that while La Niña is a natural cycle, its impacts "are being changed and amplified by global warming." In his view, the long-term warming trend caused by human activity is regulating and even intensifying the extreme weather brought by natural phenomena like La Niña.

Meteorologists predict that this round of La Niña is at or will soon reach its peak in the coming weeks, after which the equatorial Pacific will return to a neutral state. However, even then, its impacts on global weather patterns will not end immediately, with related effects possibly lasting several more months.

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