Global Crop Watch - Brewing El Nino enhances crop weather risks
• El Nino odds-on to start during next three months
• Depresses eg Australia wheat, Malaysia palm oil output
• However tends to boost Argentine wheat, US corn
• Market impacts complex
Did the coming of May fire the starting gun for El Nino?
The chance of the weather pattern, linked to warmer Pacific ocean temperatures, kicking off in the May-to-July period is odds-on, at 61%, official US meteorologists say.
Certainly, with the odds rising above 90% in the August-to-October period, and staying there for the rest of 2026, El Nino is on its way.
That matters for agriculture, given El Nino’s record of causing weather extremes. El Nino has gained a fearsome reputation for crop disruption which is, partially, deserved.
It does tend, for instance, to weaken monsoon rains in India, a substantial rice and wheat producer. In terms of world prices, however, it is the effect on the big grain exporters which is most influential.
Australia’s wheat harvest fortunes are notoriously vulnerable to El Nino droughts.
Of the 22 El Nino seasons over the past 60 years, 19 have witnessed Australian wheat yield declines, averaging 23% year on year. It is not difficult, on this basis, to get to the 2026/27 crop outlooks of about 27Mt that some local sources foresee, down 9Mt year on year.
Less well documented is that El Ninos have a history of hurting Prairies wheat too. In Canada - where the weather pattern is associated with dryness and warmth - wheat yields have fallen in 14 of the past 22 El Nino seasons.
Although farmers in Argentina, where the climatic phenomenon boosts rains, tend to enjoy stronger crops - and the pattern appears neutral in Europe and Russia - the world wheat yield is twice as likely to fall as to rise in El Nino seasons.
Even so, that does not guarantee price rises in 2026/27. To judge by values received by US farmers, there is little link between wheat values and world wheat yield fortunes.
One reason for this is that, for rival grain corn, El Ninos tend to support output. The world corn yield has risen, rather than fallen, during El Nino seasons since 1965/66 by a ratio of two to one, a pattern reflected in all of the top three exporters, Argentina, Brazil and the US.
Indeed, it is important in assessing grain supply risks to consider the broader picture.
In rapeseed, for instance, El Nino’s yield impacts are relatively mild compared with those for wheat, even in Australia. This may reflect Australia’s reliance in canola output on Western Australia, where El Nino effects are less pronounced.
However, for vegetable oil markets overall, El Ninos are significant in their habit of bringing drought to the big South East Asian plantations and depressing palm oil output – often with a lag, reflecting the intricacies of a tree crop.
Certainly, the price impacts of El Ninos are not as predictable as might appear from, say, the strong link with Australian drought. World market impacts are less easy to foresee than those for regional agriculture.
Nonetheless, the looming El Nino may offer wheat price support, if only in reminding of weather risks to a market which had, until recently, appeared complacent on supplies.
