'Super' El Nino could raise global food prices until 2028
What's the story
A "super" El Nino weather cycle this year could lead to a major shock in global food prices, lasting until 2028, economists have warned. The warning comes as the ongoing Iran war pushes world food prices to a three-year high. The double whammy of extreme weather and geopolitical tensions is straining supply chains across the globe.
Weather patterns
NOAA warns of potential 'very strong' El Nino 2026-27
The 2026-27 El Nino, a phenomenon triggered by shifts in wind patterns that allow warmer water to spread across the central and eastern equatorial Pacific, could be a "very strong" event. This could lead to heatwaves, flooding, and stormier weather. The US National Oceanic and Atmospheric Administration (NOAA) has already confirmed warming conditions are developing in the Pacific, with a 63% chance of sea surface temperatures rising more than two degree Celsius above normal later this year.
Economic implications
Goldman Sachs predicts a 15.8% rise in food prices
The extreme El Nino is expected to worsen the already high living costs for households around the world. Goldman Sachs analysts predict this weather pattern could trigger a 15.8% jump in global food commodity prices, impacting consumers worldwide. In Europe alone, food prices could rise by 1.3% across the eurozone due to this phenomenon.
Long-term impact
Delay in price impact due to complex climate-food supply relationship
The full effect of this El Nino on global food prices will take time to materialize, due to the complex nature of climate impacts on food supplies. Goldman Sachs estimates that the consequences could be fully realized by the second half of 2028. This delay is largely due to when extreme weather events affect food production, as different crops have varying planting, growing, and harvesting cycles.
Regional effects
Regional disparities in El Nino's impact on agriculture
UBS analysts have warned that El Nino will not affect agriculture uniformly. It alters global rainfall and temperature patterns, creating regional winners and losers. Some regions may benefit from warmer weather conditions while others could suffer from droughts or flooding. This uneven impact could further complicate the already strained food supply chain caused by the Iran war and other factors like fertilizer and energy shortages.