“The strongest El Niño is here? Global agricultural supply chains ‘hit with another blow’”
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Scientific institutions have issued the strongest El Niño warning in 75 years; global agricultural supply chains are facing multiple overlapping shocks.
The US Climate Prediction Center (CPC) warns that the currently developing El Niño event has an 81% chance of evolving into an "extremely strong" level, and a 97% chance of persisting until early spring 2027.
According to Global Times, experts from the European Center for Medium-Range Weather Forecasts have also issued warnings that this year’s El Niño phenomenon may set a new record for overall intensity. Multiple countries have begun to strengthen their response deployments; the Panama Canal Authority plans to reduce the allowable draft depth for ships, and global trade routes are facing potential pressure.
Goldman Sachs commodity research analyst Lina Thomas pointed out that global agricultural supply is highly concentrated in a few regions, making agricultural markets highly susceptible to local weather, geopolitical, and policy shocks. Protectionist policy responses are a key source of upward risk for agricultural prices. Vegetable oil prices have already shown signs of rising, and market concerns over the food supply chain continue to intensify.
Climate Signals: The Strongest El Niño in 75 Years Is Taking Shape
The Climate Prediction Center under the US National Oceanic and Atmospheric Administration (NOAA) pointed out in its latest report that sea surface temperature in the central and eastern equatorial Pacific is at least 1℃ above normal, and in some areas the deviation reached up to 2.7℃ last week.
The El Niño-Southern Oscillation Index (SOI) has now dropped to its lowest level since 2005, showing the pressure pattern consistent with El Niño—weakening Pacific trade winds and persistently warm sea surface temperatures in the central and eastern Pacific.
CPC states that this event has an 81% chance of reaching "extremely strong" level, making it among the largest recorded El Niños since 1950, and has a 97% chance of persisting until early spring 2027.
According to Global Times, an expert from the European Center for Medium-Range Weather Forecasts said on the 7th that this year’s El Niño may set a new record for overall intensity, and the risk of droughts, floods, and other extreme weather events is rising globally. Recent data from the World Meteorological Organization shows that from July to September 2026, El Niño is expected to rapidly intensify, and the seasonally averaged sea surface temperature anomaly in key monitored areas is forecasted to exceed 2℃, reaching the "strong El Niño" standard.
AFP quoted climate expert Tim Stockdale as saying that this year’s El Niño phenomenon is quite different from observed records of the past 30 years, and extreme situations may occur. All forecast models have given rare but consistent predictions for this El Niño. Michigan University professor of climate and space science, Overpeck, also told CNN: "All indications suggest this will be a very intense El Niño."
High Supply Concentration Highlights Vulnerability of Agricultural Markets
Goldman Sachs commodity research analyst Lina Thomas warned in her report that global agricultural supply is geographically highly concentrated.
For major crops such as soybeans, corn, rice, sugar, and palm oil, the top three exporting countries account for 60% to 90% of global trade. This means that any local weather abnormality, geopolitical event, or policy change can cause disproportionate shocks to global supply.
Lina Thomas further noted that since major agricultural exporting countries are increasingly prioritizing domestic food and energy security through export restrictions and biofuel policies, even slight supply disruptions—or even mere concern over disruptions—can trigger policy responses, causing a reduction in actual exportable volumes far greater than the primary output shock itself. Import-dependent countries may then stockpile and pursue self-sufficiency, further fragmenting global trade, reducing market liquidity, and amplifying price sensitivity to future shocks.
Triple Recent Risks Overlap—Protectionism May Amplify Prices
Vegetable oil prices have shown signs of increase, seen as one of the earliest signals of rising expectations for El Niño in agricultural markets.
Meanwhile, Goldman Sachs recently highlighted three immediate supply risks, believing that even if their ultimate impact is limited, they may still trigger preventive policy measures by countries, amplifying price movements.
First, El Niño conditions are already established.
Goldman Sachs estimates there is a 63% chance this El Niño could become a "super El Niño." The main exporters of staples such as rice, as well as biofuel crops like sugar and palm oil, have historically faced more adverse weather during El Niño. Even if the actual impact is limited, preemptive export restrictions could compress global available supply ahead of time.
Second, rising energy prices may push up biofuel demand.
Rising energy prices and concerns over fuel security in the first half of 2026 may prompt governments to increase biofuel blend ratios, further diverting crops like sugar and corn from export markets into domestic fuel production.
Third, fertilizer market faces Hormuz Strait risks.
Ahead of the key procurement window (third quarter) before major nitrogen fertilizer importing countries enter the sowing season in the second half of the year, renewed disturbances in the Hormuz Strait could impact the fertilizer supply chain, in turn affecting agricultural production costs and yield expectations.
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