What is El Niño and why is the world so worried? Impact on crops and markets

The tropical Pacific is in the grip of one of the strongest El Niño events on record, and the world’s weather agencies say it has not yet peaked.

On Thursday, the US National Oceanic and Atmospheric Administration (NOAA) said a strong-to-very strong El Niño is likely through January–March 2027, with a better than 79% chance.

Sea temperatures in the key monitoring zone were 2.5°C above average in October, its Climate Prediction Center said.

NOAA also puts the odds of a “historic event”, stronger than any El Niño since 1950, at about 60% for this winter.

That matters far beyond the Pacific, because El Niño shifts rain belts around the globe.

What is El Niño?

El Niño is the warm phase of a natural climate cycle known as the El Niño–Southern Oscillation, or ENSO.

Normally, trade winds blow from east to west across the equatorial Pacific, piling warm water up near Indonesia, where it fuels heavy rain. Off South America, cold, nutrient-rich water rises to the surface.

During El Niño, those winds weaken or even reverse. The warm water spreads east, the rain belt follows it, and the cold upwelling off Peru is suppressed.

NOAA declares El Niño when sea temperatures in the Niño 3.4 region of the central-east Pacific stay at least 0.5°C above average for several months in a row. La Niña is the mirror image, with readings at least 0.5°C below average.

Since February, NOAA has used a relative index, RONI, which strips out the general warming of the tropical oceans so events can be compared fairly.

When is El Niño coming, and how strong will it be?

It is already here. NOAA declared El Niño on 11 June.

The event has strengthened steadily. NOAA’s relative index reached +1.97°C for August–October, just behind the +2.07°C recorded at the same stage of the 1997 event. The highest three-month reading in its records is +2.40°C, from December 1982 to February 1983.

On the traditional index, the August–October reading of +2.46°C is already the highest for that season since 1950.

NOAA’s median forecast has the relative index peaking at about +2.53°C in November–January, which would beat that 1983 record, before the event weakens in early 2027.

Australia’s Bureau of Meteorology said on 10 November that all the models it assesses have the warming peaking in November or December, with El Niño levels lasting into the southern hemisphere autumn.

The World Meteorological Organization (WMO) said in September there was a near-100% chance of El Niño lasting through February 2027, the first time one of its updates had been so unequivocal.

NOAA’s probabilities show El Niño fading to a 38% chance by April–June, when neutral conditions become the most likely outcome.

Why is the world so worried?

The first worry is heat, as El Niño releases ocean heat into an atmosphere already warmed by human activity.

The EU’s Copernicus climate service said on 11 November that October 2026 was the warmest October on record, at 1.75°C above pre-industrial levels. It said 2026 is virtually certain to be only the second calendar year above 1.5°C, after 2024.

The biggest temperature effect usually comes the following year. Climate site Carbon Brief projects 2027 at about 1.7°C above pre-industrial levels, with a 96% chance of being the warmest year on record.

The second worry is cost. A 2023 study in Science by Dartmouth researchers Christopher Callahan and Justin Mankin estimated global income losses of $4.1 trillion and $5.7 trillion in the five years after the 1982–83 and 1997–98 El Niños.

The third is food. IMF managing director Kristalina Georgieva told AFP in October that the fund was preparing to support vulnerable countries.

“We are concerned about food security,” she said, also citing pressure on inflation from food prices.

What impact could it have around the world?

El Niño tends to bring drought to India, Southeast Asia, eastern Australia, southern Africa and northern South America. It usually brings heavier rain to the southern US, coastal Peru and Ecuador, and southern Brazil, Uruguay and northern Argentina.

Much of that is already happening. India’s June–September monsoon delivered 87% of its long-period average, the fourth-lowest since 2001, the India Meteorological Department said.

Southern Africa’s regional climate forum expects below-normal rain across much of the region through March, a risk for maize, the staple crop.

In Central America, many subsistence farmers lost more than 75% of their first maize and bean harvests, the EU’s Joint Research Centre said on 10 November.

Peru cancelled its second anchovy season of 2026 in October after warm water pushed fish deeper. The country supplies up to 20% of the world’s fishmeal and fish oil, SeafoodSource reported.

Not everywhere is suffering. Australia’s ABARES forecasts a 29.9 million-tonne wheat crop, 3% above the 10-year average, while Argentina and southern Brazil should gain from wetter weather.

What is the likely impact on agriculture and food prices?

The FAO Sugar Price Index rose 6.6% in October to its highest level since December 2024, the UN agency said on 6 November, citing problems in Brazil, India and Thailand. Raw sugar futures for March delivery traded at 18.39 cents a lb at 12:26 GMT on Friday, 27% higher than a year ago.

FAO expects world rice production to fall 2.5% to 552 million tonnes, the first drop in four seasons, partly because of El Niño. US rough rice futures settled at $18.29 per hundredweight on Thursday, about 50% above their level on 11 June.

Policy can amplify the weather: in July 2023, as the last El Niño developed, India banned exports of non-basmati white rice.

Ivory Coast’s weather agency has warned that El Niño could cut the country’s 2026–27 cocoa harvest by 21% to 25%, Reuters reported on 11 November. New York cocoa futures were at $5,257 a tonne at 12:27 GMT on Friday, up about 42% since El Niño was declared.

The Indonesian Palm Oil Association (GAPKI) estimates El Niño could cut Indonesia’s output by up to 3 million tonnes, mostly in 2027. Malaysian palm oil futures closed at 4,462 ringgit ($1,093) a tonne on Friday, up 4.79% this week.

What does El Niño mean for markets?

For investors, the main channel is inflation. Morgan Stanley Research said in August that El Niño has historically had little bearing on global asset prices outside commodities, but that a “super” event could break that pattern.

It named sugar as the crop most likely to see a price boost and flagged copper supply risks in Chile and Zambia. It said food-driven inflation could delay rate cuts in Brazil, Colombia and Peru, and that emerging-market sovereign debt was among the most exposed assets.

Sugar producers and suppliers of seeds and fertiliser could benefit, the bank said, while companies that buy those crops could face higher costs.

What happens next?

NOAA’s next update, due on 10 December, should show whether the event has set a new record.

Even after the Pacific cools, the effects will linger. Palm oil losses, southern Africa’s harvest and the expected heat of 2027 suggest El Niño will shape commodity markets well into next year.

AI disclosure: AI tools assisted with research and drafting of this piece. An Invezz editor reviewed the facts, sources and wording before publication. Any opinions or analysis are Invezz’s, not those of an automated system.

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