El Nino Storm Brewing: Sugar and Corn Prices in the Crosshairs

A potentially record-strength El Niño is brewing in the Pacific Ocean, and its impact on global food markets will be significant. The National Oceanic and Atmospheric Administration (NOAA) has increased its probability forecast for a strong El Niño event to 75%, with a RONI reading of at least +2.5°C by October-December.

The strongest risk from this weather pattern is in the sugar market, particularly in Brazil and Thailand. A large Brazilian sugarcane crop does not automatically translate into more exportable sugar, as cane mills' conversion rates play a crucial role. India's rebounding sugar production will be critical in offsetting these risks.

Corn prices are also at risk due to tighter balance sheets and South American weather conditions. While corn enters the coming weather window with less balance-sheet protection than it had in August, planting progress is the next major variable. Delays or deteriorating reproductive conditions could lead to significant price movements.