Strong El Nino Threatens Global Crops Amid War Disruptions by Amit Gupta, Kedia Advisory
A strong El Niño is expected to emerge in 2026, bringing hotter and drier weather across Asia, particularly impacting India, Australia, and Southeast Asia. Forecasts indicate below-average monsoon rains in India, raising concerns over crop yields for rice, cotton, and soybeans. Simultaneously, the Iran war has disrupted fertiliser supplies and increased fuel costs, adding pressure on farmers. Early dryness has already reduced planting in Australia, while palm oil production in Southeast Asia may decline. Although the U.S. and Europe may see increased rainfall, excessive moisture could disrupt harvests, creating global agricultural uncertainty and potential supply shortages.
Key Highlights
* Strong El Niño likely in 2026, triggering heat and dryness across Asia
* India may face below-normal monsoon, threatening key crop yields
* Iran war disrupts fertiliser supply, increasing input costs globally
* Australia already witnessing severe dryness, cutting wheat and canola planting
* Excess rains in U.S. and Europe may disrupt harvest and crop quality
Agricultural markets are entering a volatile phase as crop price sentiment turns firm amid growing concerns over a strong El Niño event in 2026. Prices of key commodities such as wheat, oilseeds, and edible oils are witnessing underlying support due to tightening global supply expectations. The bullish tone is further reinforced by early weather disruptions across major producing regions.
Supporting this price strength are reports of severe dryness in Australia, where farmers have already scaled back wheat and canola planting due to poor rainfall. Similarly, India is expected to receive below-average monsoon rainfall, estimated between 70% and 90% of normal levels, which could significantly impact kharif crops like rice, cotton, and soybeans. Lower soil moisture may also affect rabi crops, tightening future supply cycles.
In Southeast Asia, concerns are rising over palm oil production, with projections indicating a potential 5% to 12% decline if El Niño intensifies. Given the crop cycle, the impact could be prolonged, adding sustained pressure on edible oil markets. Meanwhile, China’s relatively moderate exposure does little to offset global supply risks due to its large import dependency.
Further compounding the situation is the Iran war, which has disrupted fertiliser supply chains through the Strait of Hormuz, a critical trade route. Rising fertiliser and fuel costs are discouraging farmers from optimal input usage, potentially reducing yields further. While increased rainfall in the U.S. and Europe could offer some relief, excessive moisture during harvest periods may damage crop quality and delay supply.
A strong El Niño combined with geopolitical disruptions is likely to tighten global crop supplies, keeping agricultural markets volatile with a firm to bullish price outlook in coming months.
Above views are of the author and not of the website kindly read disclaimer
