Super El Nino Fuels Grain Price Rally Amid Supply Concerns

A Super El Nino weather pattern is causing anxiety among grain farmers and traders, pushing up prices of grains such as soybeans and wheat. The 'elephant in the room' for commodity markets this summer is the Super El Nino setting up in the Pacific Ocean, which has already had a significant impact on global weather patterns.

The warming in the Pacific has earned it the title of a 'Super El Nino', with surface temperatures at least 2 degrees warmer than normal. This could lead to hotter and drier growing conditions in northern and central Brazil, where soybean yields are likely to suffer.

However, southern Brazil and northern Argentina may actually experience more rainfall and improved crop potential. The strong demand for soybeans, coupled with the perceived threat to supply, is driving up prices. At the end of July 2025, Chicago soybean futures were trading at around $9.75 per bushel, but by the end of July 2026, they were flirting with $12.50.

Australia's wheat production is also at risk due to the Super El Nino. Climatologists have modelled weather patterns that could reduce Australia's wheat crop to 26.7 million metric tonnes, a 20% decline from their 2025-2026 production.