A strong El Niño is developing and expected to push prices higher for cocoa, coffee, rice, sugar and maize. Experts highlight risks from combined weather and geopolitical factors.
Forecast models indicate this El Niño could become the strongest on record, with sea surface temperature anomalies at 3.6°C above average. This exceeds the previous record by 0.8°C. The pattern is projected to persist through the northern spring.
Markets face added pressure from the ongoing Iran war, which has disrupted fertiliser supplies. Aneeka Gupta of WisdomTree Europe noted this combination has not occurred in prior El Niño cycles. Cocoa production in West Africa is already showing weak pod development.
South Africa holds a record maize harvest of 17.3 million tonnes. Ample stocks and dam levels may limit immediate price rises for local consumers. Reezwana Sumad of Nedbank warned that a multi-season drought could push food inflation into double digits.
Barry Callebaut stated that current surpluses should help ease supply shocks for chocolate. The US Weather Service gives a 97% chance the event will last beyond the northern spring.