El Nino threatens new jolts to commodity prices

Global commodity markets may soon face fresh turbulence as the El Nino climate phenomenon approaches, with forecasters predicting its emergence by July. After months of neutral conditions, signs of the weather pattern have recently intensified, raising alarms among traders and producers.

How El Nino disrupts production

Commodities expert Zafer Ergezen told Anadolu that the probability of El Nino developing by mid-2026 has now surpassed 80%, with sea surface temperatures already climbing. “Warming oceans, combined with weakening winds toward the Americas, drive Pacific temperatures higher. This brings more rain to the Americas but less to Asia and Australia, leading to drought and disrupted seasons in Africa and India,” he explained. He identified Asia as a high-risk zone for palm oil, cocoa, and cotton output.

Palm oil, cocoa, and rice at risk

Indonesia supplies roughly 60% of the world’s palm oil, and Malaysia is another major producer, making the entire vegetable oil market—including soybean and sunflower oil—vulnerable to weather shocks. “Over the last 50 years, El Nino has reduced cocoa harvests. While cocoa may not be hit this year, next year could see price spikes,” Ergezen said, adding that the coming El Nino is expected to be stronger than previous ones. He also warned that delayed Indian monsoon rains and high heat could trigger pest outbreaks in cotton fields. Meanwhile, reduced rainfall in Thailand and Vietnam—two of the world’s largest rice exporters—could pressure rice supplies.

Monsoon as a gauge

On the positive side, Ergezen noted that soybean production in the US and Argentina has historically risen during El Nino periods, and a similar trend may emerge this year. He stressed that India’s June-September monsoon will be a key barometer of El Nino’s severity. “If the monsoon is ordinary, risks may ease. But if its impact is weak, that will be an early warning of a particularly strong El Nino ahead,” he said.