El Nino's Unpredictable Path: Global Food Crisis Looms

Around the world, extreme weather is on the rise, and it's not just hurricanes that are causing trouble. NOAA estimates that there's a 90% chance of an El Niño occurring this autumn and winter, with a 69% chance of the strongest El Niño since 1950 appearing in the fourth quarter.

JPMorgan warns that a global food crisis could erupt by 2027, and it won't just be at the gas station. Inflations will hit supermarket shelves as agricultural products see sharp rallies due to El Niño expectations, but these rallies may come and go quickly.

Liu Chuanxi, chief meteorology researcher at Kaifeng Investment, a multi-billion dollar private fund in China, has been studying the effects of El Niño on global markets. He explains that this round of El Niño is different from previous ones due to global warming, which may set a new record for global average temperature.

Historically, droughts caused by El Niño occurred mainly in equatorial regions, but this year's droughts are happening outside the tropics as well. For example, Europe has seen extreme heatwaves and droughts, while the US saw its summer temperatures set a new record, with severe drought affecting the southern Plains.

Liu Chuanxi points out that war has introduced uncertainty into El Niño's impact. The Middle East war pushed up international oil prices, and energy costs transmitted to fertilizers, weakening crop-growing regions' ability to withstand extreme weather.

The Russia-Ukraine situation intensified in July-August, causing diesel supply tightness and grain export terminal disruptions. This led to a decline in global grain exports, further aggravating this year's grain and agricultural supply tightness.