Potential Impact of El Niño on Global Food Prices

El Niño’s Influence on Global Climate

Analysts alert that an emerging powerful El Niño in the Pacific Ocean may increase global food prices in the coming months and years. Early forecasts from the World Meteorological Organization (WMO) warned of rapidly strengthening El Niño conditions. These conditions could lead to heatwaves, droughts, heavy rainfall, and other extreme weather worldwide. The National Oceanographic and Atmospheric Administration (NOAA) identified an 81 percent chance of a “very strong” El Niño between October and December, which may rank among the largest recorded since 1950.

Meteorologists and economists, including World Bank analysts, caution that this event, sometimes called a “super” or “Godzilla” El Niño, might disrupt global agriculture and food supply chains through next year. This would intensify economic pressures on countries globally. Goldman Sachs analysis, as reported by The Guardian, suggests the El Niño could cause a 15.8 percent increase in global food commodity prices, potentially reaching its full impact by the second half of 2028.

Understanding El Niño

El Niño, meaning “little boy” in Spanish, is a climate pattern marked by unusual warmth in the central and eastern tropical Pacific ocean. This warming disturbs typical weather patterns across the globe, bringing flooding and heavy rain to some areas while triggering droughts and heatwaves in others. The World Food Programme (WFP) notes that these extremes can simultaneously cause drought and severe flooding in different regions. Such effects damage crops, livestock, and infrastructure, reducing food production and disrupting markets.

Potential Food Price Increase

In June, the World Bank announced that the development of an El Niño might aggravate existing food supply issues. These were already strained due to oil, gas, and fertilizer shortages from the U.S.-Iran war. Analysts from Schroders Wealth Management anticipate significant food price increases over the next year. A super El Niño could exacerbate adverse weather conditions alongside current economic and geopolitical stresses.

The climate-risk analytics firm Risilience suggests an “extreme” scenario might result in a 14.3 percent global agricultural production drop. This could lead to $342.2 billion in lost production and price shocks of 10 to 50 percent across major food crops. William A. Masters, a food policy and economics professor at Tufts University, highlighted that although the event is challenging for millions in Africa and Asia, the impact in the U.S. will be limited due to diversified import supply chains.

Grocery shoppers mainly face food price inflation driven by energy, labor, and trade access. Chris Barrett, an applied economics and management professor at Cornell University, forecasts that regions like Australia, South, and Southeast Asia will experience extreme impacts. This could heighten prices for wheat, rice, and palm oil soon, especially for regions already facing supply disruptions from the Iran conflict.

Fortunately, global cereal stocks are relatively high following last year’s successful harvests, offering a buffer against the coming El Niño shock if managed well. Joseph Balagtas, an agricultural economics professor at Purdue University, remarked that price impacts in the U.S. and global markets vary by crop. Local weather effects can impact fruits and vegetables quickly due to concentrated production regions.

The greatest agricultural concern is the effect on rice-growing areas. Rice is a staple for billions, particularly in Asia. Production relies on seasonal monsoon rain. El Niño’s disruption of these rains raises concerns about food security and affordability for regions dependent on local rice production.

Broader Impacts on Energy

The consultancy group Wood Mackenzie foresees far-reaching impacts on energy due to El Niño. Ed Crooks, Wood Mackenzie’s vice chairman for the Americas, noted in a report that severe droughts could hinder international energy trade. Changes in cloud cover, wind speeds, precipitation, and snow melting might significantly affect renewable generation.