El Nino’s onset last month poses a threat to a range of agricultural commodities, from rice and wheat to cocoa, palm oil, sugar and robusta coffee, across the world, according to research agency BMI, a unit of Fitch Solutions, and Dutch multinational financial firm Rabobank. Analysts said the threat will vary from crop to crop rather than impact crops uniformly.
Rice at the centre of El Nino concerns
BMI identified rice as the clearest channel of concern. “Rice stands out as the clearest channel of concern, given its thinly traded surplus and the concentration of both production and exports in high-sensitivity Asian origins,” the research agency said. The agency noted that India’s rebuilt stockpiles materially reduce the likelihood of a repeat of the pre-emptive trade restrictions that drove the 2023-24 rally. India’s buffer stocks are rising from 30.1 per cent of consumption in 2023-24 to an estimated 42.2 per cent in 2026-27, which BMI said reduces the likelihood of a repeat of pre-emptive export restrictions.
Corn and wheat: limited direct exposure
BMI said corn and wheat face more limited direct exposure globally, with output and trade anchored in low-to-moderate-sensitivity origins. This is despite mounting Black Sea disruption, European drought and easing exporter output, which leave the broader supply picture tightening independently of El Nino.
Corn faces the least direct El Nino exposure, as its major producers — the US, Brazil and Argentina — sit largely outside high-sensitivity zones. Any weather setbacks are far more likely to affect crop timing than force material production downgrades, BMI said. A stronger South African carry-in, with beginning stocks of 17.9 per cent of use versus 14.9 per cent, leaves the region better insulated than in 2023-24.
For wheat, BMI said El Nino risk is contained, but it would compound an already tightening supply picture. “With only Australia among the top five exporters carrying high sensitivity, the greater threats stem from European drought, easing exporter output and renewed Black Sea disruption,” it said.
Cocoa, palm oil, sugar and robusta coffee under pressure
Rabobank said a strengthening El Nino is putting cocoa, palm oil, sugar, robusta coffee and Australian grains under renewed weather-related pressure, and that these markets would be the most affected due to adverse weather.
The Dutch multinational financial firm said food and beverage companies would feel the impact most directly through commodity availability and prices, although the timing and severity would vary considerably between markets. In Australia, wheat, barley and canola yields can fall sharply during strong El Nino events, and production losses could have an outsized impact on global grain trade given Australia’s role as a major wheat exporter, Rabobank warned.
A mixed picture for grains and oilseeds
Rabobank said grains and oilseeds present a more mixed picture: Argentina and parts of North America could benefit from increased rainfall, supporting crops including corn, soybeans and winter wheat. Australia is the key downside risk, it added.
Weather uncertainty in the yield-determining stage
The UN Food and Agriculture Organisation’s Agricultural Markets Information System (AMIS) said weather patterns over the remainder of the growing season will play an important role in determining final production outcomes. Hot and dry conditions have affected parts of Europe, the Black Sea region and North America during critical stages of crop development, AMIS reported.
While rainfall brought relief to some areas, persistent heat can accelerate crop maturation, shorten grain-filling periods and curtail final yields, particularly where soil moisture reserves are already limited, said AMIS. “Given that maize (corn) crops across much of the northern hemisphere are still in yield-determining stages, weather developments over the coming weeks will remain closely watched,” the FAO arm said.
Commodity risk snapshot
| Commodity | Analyst assessment | Risk level |
|---|---|---|
| Rice | BMI: clearest channel of concern; thinly traded surplus; high-sensitivity Asian origins | High |
| Wheat | BMI: contained El Nino risk; EU drought, Black Sea disruption bigger threats | Moderate |
| Corn | BMI: least direct exposure; US, Brazil, Argentina outside high-sensitivity zones | Low |
| Cocoa | Rabobank: renewed weather-related pressure | High |
| Palm oil | Rabobank: renewed weather-related pressure | High |
| Sugar | Rabobank: renewed weather-related pressure | High |
| Robusta coffee | Rabobank: renewed weather-related pressure | High |
| Australian grains | Rabobank: sharp yield falls; outsized global trade impact | High |
The report also turned to import-side risks, beginning with Nigeria and Mexico, according to the article. Weather patterns over the coming weeks will remain a closely watched factor as northern hemisphere maize crops enter yield-determining stages, with the eventual production outcome depending on conditions across Europe, the Black Sea region and North America.
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