"Super" El Niño could cause a global food price shock lasting until 2028 - analysts
Kyiv • UNN
Economists warn that a strong El Niño could cause global food prices to rise by 15.8% due to extreme weather. The full effect will only be felt in the second half of 2028.
Economists warn that the "super" El Niño weather cycle this year could cause a serious shock to global food prices that will last until 2028, reports UNN citing The Guardian.
As the war in Iran pushes global food prices to their highest level in three years, economists said supply chains are facing "two shocks at once" caused by extreme weather linked to global warming.
Scientists said the 2026-27 El Niño, which forms when changes in wind patterns allow warmer water to spread across the central and eastern equatorial Pacific, has a historically unprecedented chance of becoming a "very strong" event, fueling heat waves, floods and stormy weather conditions.
The U.S. National Oceanic and Atmospheric Administration (NOAA) confirmed last month that warming conditions are taking hold in the Pacific Ocean, and that there is a 63% probability that sea surface temperatures will exceed 2°C above normal later this year.
At a time when households around the world are already feeling the pressure of soaring living costs, experts say an extreme El Niño could further intensify the pressure. The prospect of a renewed inflationary shock will also alarm central banks, heightening concerns that interest rates may remain elevated.
"El Niño brings 'climate inflation' back onto the agenda," write analysts at Italian bank UniCredit in a research note. "Recent heat waves in Europe are a reminder that the climate baseline is already shifting. El Niño could add a new layer of pressure later this year as it amplifies the effects of global warming."
This natural phenomenon has a history of impacting crops and food supply chains. Over a century ago, an El Niño that was likely the most severe on record caused catastrophic droughts in China, South Africa, Brazil, Egypt and India. Triggering famines in a situation worsened by colonial rule, millions of people died, including over 6 million people in India in 1876-78.
El Niño events in 1981-82, 1996-97, 2015-16 and 2023-24 were among the strongest on record. However, NOAA forecasts indicate that the 2026-27 cycle could be even more severe – increasing the risk of droughts and floods that will affect crops and food supplies worldwide.
According to Goldman Sachs analysts, the strength of this El Niño could cause global food commodity prices to rise by 15.8%. This will have a negative impact worldwide, including on consumers in Europe, where food prices are forecast to rise by 1.3% across the eurozone.
However, the full effect takes time due to how the price of climate impact spreads through global food supplies. As a result, Goldman Sachs said the consequences may only be "fully realized" in the second half of 2028.
The delay is largely due to the timing of extreme weather conditions affecting food production, given the different planting, growing and harvesting cycles for various types of crops. Logistical issues, including water levels in canals and rivers used for key transportation, will also have an impact.
"El Niño affects agriculture unevenly. It changes global patterns of precipitation and temperature, creating regional winners and losers," said UBS analysts. Some regions may benefit from warmer weather conditions.
"El Niño has already begun to affect agricultural crops, causing a drier monsoon season in India, with some regions receiving only 25% of the usual rainfall and some parts of central India receiving only 50%, which could impact the supply of wheat, rice, and sugarcane," write Goldman Sachs analysts.
The impact is likely to be felt around the world.
Analysts say droughts in Southeast Asia could affect the supply of palm oil – a key ingredient in processed foods – as well as coffee and cocoa harvests. Warmer and wetter conditions could also increase the spread of diseases, negatively impacting yields in future years.
In North America, the impact of El Niño is strongest in winter, and while weather conditions in Europe may depend on weather events, analysts say other factors, such as the impact on global food prices, will be where it is felt.
Three years ago, the European Central Bank estimated that a strong El Niño could lead to a rise in global food prices of up to 9%, with the biggest spikes seen in soybeans, corn, and rice.
How prices are reflected on store shelves depends on mitigation strategies and domestic policies. Factors such as consumer demand and retail prices also play a role.
According to UniCredit, the probability of an extreme El Niño scenario remains high. This could lead to a 14.3% drop in global agricultural production, equivalent to a production loss of $342 billion, the report says.
"Price shocks could range from 10% to 50% for major commodities, while prices for the most vulnerable crops, including rice, palm oil, sugar, and coffee, could rise by 50%-100% or more," the bank's report says.
Reference
El Niño occurs due to the weakening of trade winds, leading to the accumulation of warm waters in the central and eastern parts of the equatorial Pacific Ocean. This phenomenon typically causes a rise in global temperatures and significantly alters weather conditions in various regions of the world — from droughts to large-scale floods.