The Super El Niño could cause further disruptions in international commodity markets in 2027, impacting the production of various agricultural products. According to an analysis by Freedom24, sugar, palm oil, cocoa, coffee, rice, and fishmeal are among the products most exposed to potential production shortfalls.

The combination of climate risks with geopolitical conflicts and disruptions in energy supply could intensify market volatility and create new inflationary pressures.

The update from the United States National Oceanic and Atmospheric Administration (NOAA), published on October 8th, points to an intensification of the phenomenon. The temperature anomaly in the Niño-3.4 region is at +2,1 °C, with a probability of a strong to very strong El Niño occurring between January and March 2027 exceeding 83%.

Impact on food prices

According to estimates from the European Central Bank (ECB), historically strong El Niño episodes have been associated with a rise of around 9% in world food commodity prices at the peak of the effect, which occurs approximately 16 months after the start of the phenomenon. For non-energy commodities as a whole, the aggregate historical impact is estimated at around 5%.

Climate risk arises in a context of geopolitical and energy instability. The war in Iran has driven up the price of Brent crude oil to around $108 a barrel, while liquefied natural gas flows from the Middle East remain well below usual levels and fertilizer supplies are facing disruptions.

Products most exposed

Sugar is among the commodities most exposed to potential production shortfalls in India, Thailand, other regions of Southeast Asia, and Brazil. At the start of the previous week, raw sugar was trading at around 20,7 cents per pound, approximately 31% higher than a year earlier. StoneX forecasts a global deficit of around 900 tons in the 2026/27 season.

In the palm oil sector, the Indonesian Palm Oil Association anticipates a 3% reduction in the country's production by 2027 and a possible 15% drop in exports. However, high reserves in Malaysia may limit price increases in the short term.

Cocoa also faces risks of supply disruption. StoneX forecasts that production will decrease by 11% in Ivory Coast and 13% in Ghana in 2026/27. In coffee, risks to robusta production in Vietnam and Indonesia, as well as to the upcoming arabica harvest in Brazil, could favor a recovery in prices, although arabica will remain below levels seen a year ago.

Regarding fishmeal, in Peru, the first fishing season was suspended in June and the second canceled in October, in a context where anchovy biomass is about 23% below the long-term average. As the country usually accounts for up to 20% of the world's fishmeal and fish oil production, these restrictions could affect international supply.

Cereals influenced by geopolitics.

In the cereal market, the impact of El Niño is expected to vary depending on the region, while prices continue to be constrained by the war and disruptions in the Black Sea. Wheat traded in Chicago was about 31% higher than a year earlier, a trend that analysis largely attributes to attacks on ports in the region.

João Lampreia, market analyst at Freedom24, highlights the importance of Russia and Ukraine for global supply. “ Grain exports from Russia and Ukraine represent about 35% of international trade, so the disruptions in the Black Sea continue to hinder the normalization of supply and support prices .” According to him, less than half of the exports from these two countries can be shipped through other ports or alternative transport routes.

The analyst further warns that " the most worrying scenario would be the combination of disruptions in the supply of raw materials with increased transport and production costs, particularly for fertilizers ," he says, adding that the prolongation of conflicts in the Black Sea and restrictions on movement in the Strait of Hormuz could worsen the situation in international markets.

Energy and metals under pressure

In the energy market, perspectives diverge between the United States and Europe. A milder winter, associated with El Niño, could reduce demand for natural gas in the United States. In Europe, on the contrary, prices remain pressured by disruptions in the supply of LNG from the Middle East. In mid-October, natural gas on the TTF market reached around 86 euros per MWh, the highest level since the end of 2022, while the European Union's gas reserves stood at around 74% of capacity.

“ In a context where interest rates in major economies represent one of the biggest risks to global economic activity in 2027, it is important to highlight that the recent rise in German two-year interest rates largely reflects the evolution of natural gas prices in international markets ,” emphasizes João Lampreia.

Copper may also face additional pressure due to potential disruptions in mining production and rising costs of raw materials used in processing. The metal hit a record high of around $14.875 per ton on September 10 and remained approximately 30% above the value recorded a year earlier.

Risks to global inflation

Freedom24 believes that the combination of Super El Niño with the energy shock and geopolitical tensions could worsen global inflation.

JPMorgan estimates that a Super El Niño could add approximately 0,7 percentage points to global food inflation at its peak. If the phenomenon coincides with an energy shock, the impact could reach between 1,3 and 1,5 percentage points. The institution also estimates that the combination of the two factors could add approximately 0,3 percentage points to global inflation in 2027, with emerging markets among the most affected.

The final impact will depend on the intensity of the phenomenon, the actual damage to crops, and the evolution of conflicts. Freedom24 emphasizes that the effects of El Niño manifest themselves gradually, as weather changes affect production, supply, and subsequently, prices. Therefore, a significant portion of the economic consequences may become more visible throughout 2027.