A potentially unprecedented “super” El Niño phenomenon is poised to wreak havoc on global food prices, with analysts forecasting significant price increases that could extend well into 2028. With the ongoing conflict in Iran already driving food costs to their highest levels in three years, economists warn that the dual impact of extreme weather and geopolitical tensions could place further strain on supply chains and consumer budgets.
The Impending Climate Crisis
The El Niño cycle is characterised by shifts in wind patterns that lead to warmer sea surface temperatures in the equatorial Pacific. According to the US National Oceanic and Atmospheric Administration (NOAA), there is a 63% likelihood that these temperatures will exceed 2°C above normal later this year, making the 2026-27 event potentially one of the strongest on record. This phenomenon not only threatens to induce heatwaves and flooding but also exacerbates the existing pressures on global food supply chains already strained by geopolitical conflicts.
Economists from UniCredit have emphasised that the current heatwaves in Europe underscore a shift in the climate baseline, heightening the urgency of addressing “climateflation.” They predict that the extreme conditions associated with El Niño will amplify the adverse effects of global warming, potentially leading to severe agricultural disruptions.
Historical Context and Projected Impact
Historically, El Niño events have had dire consequences for agricultural production. The catastrophic droughts of the late 19th century, exacerbated by colonial policies, resulted in millions of deaths across Asia and Africa. Recent El Niño cycles, including those in 1996-97 and 2015-16, have also been among the most impactful. This year’s event, however, is projected to push food commodity prices up by as much as 15.8% globally, according to Goldman Sachs.
The repercussions of such increases will be felt acutely in Europe, where food prices could rise by approximately 1.3% across the eurozone. The full extent of these impacts may not be realised until the latter half of 2028, as the intricacies of agricultural cycles and logistical challenges delay the transmission of these cost pressures through the food supply chain.
Regional Disparities in Agricultural Outcomes
The ramifications of El Niño are not uniform; they reshape global rainfall and temperature patterns, creating both winners and losers in agriculture. While southern Africa and northern South America face heightened risks of drought, regions like southern Brazil and Argentina could experience flooding, further complicating supply issues. Analysts at UBS have noted that lower-income countries, already grappling with the fallout from the Iran conflict, are likely to bear the brunt of these disruptions.
In India, for instance, rainfall has dropped significantly, with some areas receiving as little as 25% of their usual precipitation. This disruption threatens the supply of crucial crops such as wheat, rice, and sugar cane. Similarly, Southeast Asia may see declines in palm oil production, a key ingredient in many processed foods, while coffee and cocoa harvests may also be adversely affected.
The Broader Economic Landscape
As central banks grapple with the implications of rising food prices, the potential for renewed inflationary pressures looms large. The European Central Bank had previously estimated that a strong El Niño could lead to a 9% increase in global food commodity prices, particularly affecting staples like soya beans and corn. The current crisis, compounded by other factors such as energy shortages and restricted fertiliser supplies, presents a precarious situation for global food security.
The complexities of how prices translate to consumers are influenced by various factors, including domestic agricultural policies and market demand. UniCredit foresees that an extreme El Niño scenario could inflict a 14.3% reduction in global agricultural production, equating to a staggering $342 billion (£254 billion) in lost output. They warn that price spikes for core commodities could range from 10% to 50%, with the most vulnerable crops facing increases of 50% to 100% or more.
Why it Matters
The potential impact of a super El Niño extends beyond immediate price increases; it poses a significant threat to global food security and economic stability. As households worldwide continue to navigate escalating living costs, the compounded effects of climate change and geopolitical conflicts create a precarious landscape. This situation reinforces the urgent need for policy responses that address both climate resilience and food supply stability, ensuring that vulnerable populations are safeguarded against the forthcoming shocks to the global food system.
