The looming threat of a "super" El Niño in 2026-2027 is sending shockwaves through the global economy, with economists warning of a potential food price crisis that could last until 2028. This natural phenomenon, characterized by unusually warm water in the Pacific Ocean, has the potential to disrupt food supplies and send prices soaring, especially in regions already struggling with the impact of the Iran war. The situation is particularly dire as it coincides with soaring living costs and rising inflation, putting pressure on central banks to keep interest rates elevated.
What makes this El Niño so concerning is its unprecedented strength. Scientists predict it will be one of the strongest on record, with a 63% chance of sea surface temperatures exceeding 2C above normal. This could lead to extreme weather events, including heatwaves, flooding, and stormier conditions, which will have a devastating impact on agriculture and food production.
The historical impact of El Niño on food supplies is well-documented. A century ago, a severe El Niño caused catastrophic droughts across China, southern Africa, Brazil, Egypt, and India, leading to widespread famine and millions of deaths. The most recent strong El Niños in 1981-82, 1996-97, 2015-16, and 2023-24 have also had significant effects on global food production.
Economists at Goldman Sachs predict a 15.8% surge in global food commodity prices due to this El Niño, with a knock-on effect on consumers worldwide. Europe, in particular, could see food prices rise by 1.3% across the eurozone. However, the full impact may take until the second half of 2028 to materialize due to the complex global food supply chain and the varying timing of extreme weather events.
The El Niño will exacerbate the disruption caused by the Iran war, adding food supply chain woes to already higher prices and shortages of fertilizers and energy. Lower-income countries, already hit hardest by the conflict, are likely to suffer the most. In India, for example, the El Niño has already led to a drier monsoon season, with some regions receiving only 25% of their usual rainfall, affecting wheat, rice, and sugarcane production.
The impact of El Niño is not limited to food prices. Droughts in Southeast Asia could affect palm oil supply, a significant ingredient in processed food. Coffee and cocoa harvests may also be affected, and warmer, wetter conditions could exacerbate the spread of disease, impacting crop yields in future years. In North America, the impact is strongest in the winter, but Europe will also feel the effects, particularly through the global food price shock.
The European Central Bank estimated that a strong El Niño could drive up global food commodity prices by up to 9%, with soya beans, corn, and rice seeing the biggest spikes. The capacity for an extreme El Niño scenario remains high, with the potential for a 14.3% hit to global agricultural production, equivalent to a $342 billion loss in output. Price shocks could reach 10% to 50% across core commodities, with the most exposed crops seeing spikes of 50% to 100% or more.
In conclusion, the "super" El Niño poses a significant threat to global food security and economic stability. As we witness the devastating impact of climate change, this natural phenomenon highlights the urgent need for comprehensive mitigation strategies and global cooperation to address the challenges posed by extreme weather events and their long-lasting consequences.
