El Niño Threatens Global Commodity Markets with Wetter Harvests and Drought
El Niño is expected to have a significant impact on agriculture in the US and Latin America, particularly in countries such as Brazil, Argentina, and Mexico. The National Oceanic and Atmospheric Administration (NOAA) has reported that there is a greater than 90% chance of El Niño becoming a very strong event during the Northern Hemisphere fall and winter of 2026-27.
The ocean signal behind this warning is already unusually strong, with July sea-surface temperature anomalies reaching +1.4°C in the Niño 3.4 region and +2.9°C in Niño 1+2. This could have a significant impact on crop yields and prices in the US and Latin America.
The timing of this event is particularly sensitive for US agriculture, as farmers are moving from yield formation to harvest. The Corn Belt is expected to experience a wetter and potentially more difficult harvest environment, which could lead to reduced field-workable days by around 20% this fall, according to Eric Snodgrass, senior atmospheric scientist at Nutrien Ag Solutions.
In contrast, areas such as Arkansas are experiencing drought conditions, with irrigation wells running continuously and subsoil moisture almost absent. This could lead to crop-specific issues, including premature plant death, lodging, grain shattering, and brittle kernels that can reduce milling yields for rice and cotton.
The consequences of El Niño will be far-reaching, not just for agriculture but also for commodity markets. The event could influence US harvest conditions and South American production expectations within the same trading window, linking weather from the Corn Belt to soybean and corn prices across global markets.