‘Super’ El Niño could cause global food price shock lasting into 2028, analysts say
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- Goldman Sachs projects a 15.8% surge in global food commodity prices and a 1.3% rise in eurozone food prices from the 'super' El Niño, but says the full effect won't be realized until the second half of 2028 due to differing crop planting/harvest cycles and logistical bottlenecks like river and canal water levels.
- NOAA confirmed a 63% chance that 2026-27 Pacific sea surface temperatures will exceed 2°C above normal — an 'unprecedented' threshold that could make the cycle more severe than the strong El Niños of 1981-82, 1996-97, 2015-16 and 2023-24.
- UniCredit estimates an extreme El Niño scenario could cut global agricultural production by 14.3% — equivalent to $342bn (£254bn) in lost output — with core commodity prices spiking 10-50% and exposed crops including rice, palm oil, sugar and coffee rising 50-100% or more.
- India's monsoon has already been disrupted, with some regions receiving only 25% of normal rainfall and central India at 50%, threatening wheat, rice and sugar cane supplies, according to Goldman Sachs analysts.
- Lower-income countries — already squeezed by the Iran conflict and high fertilizer and energy prices — are likely to suffer most, as El Niño typically drives drought across southern Africa and northern South America while flooding southern Brazil, Argentina, Paraguay and Uruguay.
- South-east Asian droughts could disrupt palm oil supply, a key processed-food ingredient, while warmer, wetter conditions elsewhere may accelerate the spread of crop disease that hits future-year yields, UBS analysts warned.
- Central banks face renewed 'climateflation' pressure that could keep interest rates elevated, as the Iran war and El Niño combine as 'two shocks at once' on global supply chains, UniCredit analysts wrote.
Why it matters: Goldman Sachs projects a 15.8% surge in food commodity prices, with UniCredit estimating a 14.3% cut to global agricultural production worth $342bn — hitting hardest the same lower-income countries already squeezed by the Iran war, while central banks face renewed 'climateflation' pressure that keeps interest rates elevated.
