El Niño: which commodities are likely to see the most impact?

El Niño is already showing up in prices. Think of it as the Pacific running a fever: warmer than usual water that rewrites rainfall patterns around the world, bringing drought to some growing regions and flooding to others. For agricultural markets, that tends to mean tighter supply and bigger price swings.

Cocoa: a dry spell in the wrong place

Cocoa is the clearest case. Ivory Coast and southwestern Ghana, key growing regions, have had below normal rainfall for the past couple of months, and broker ADMIS expects more of the same. Ivorian port arrivals were down 52% year on year in the week to 11 October. London cocoa rose 2.2% to £4,375 a tonne on Tuesday, its highest level since early September.

The catch is a large expected global surplus for 2025/26, which has been keeping a lid on prices.

Sugar: the problem is too much water

Record rainfall in Brazil, the top grower, has left cane waterlogged and more of it unharvested, which tightens global supply. Raw sugar touched a 19-month high of 21.24 cents per lb last week.

Caveat emptor: Rabobank expects Brazil's rain to help next year's crop, which could weigh on prices in the second half of 2027. So, the upside may be a short-term story.

Coffee: Central America first, Brazil next

Coffee offers an early read on how far El Niño reaches. Drought in Central America has pushed premiums for the region's arabica to around three-year highs. The region supplies 15% of global arabica, and Honduras and Guatemala are forecasting output down 7% and 10% respectively.

For now, strong Brazilian exports are keeping prices in check. The bigger question is whether dry weather reaches Brazil later this year, because that would threaten the 2027/28 crop.

Palm oil: all eyes on 2027

Malaysian palm oil futures hit a more than two-week high on Tuesday, even with September stockpiles at 3.51 million tonnes after record production. Traders are looking past that to 2027, when the lagged effect of El Niño and Indonesia's growing biodiesel demand under its B50 policy could tighten supply.

What to watch

We're not over the worst yet. The World Meteorological Organization expects El Niño to intensify and peak in December, and puts the odds of it lasting until February 2027 at close to 100%. It forecasts sea surface temperatures in the central and eastern tropical Pacific at a record 3.7C above normal between October and December, well above the previous record of 2.6C. "We are currently witnessing an El Niño event that is unprecedented in the historical record," Dr Zeke Hausfather, a climate scientist at Berkeley Earth, told the BBC.

The upshot is that weather risks could build rather than ease, with delayed effects on crops such as Brazilian coffee and Malaysian palm oil that may only show up in 2027. Each market also has its own counterweight, so timing and risk management matter as much as the theme itself.

Past performance is not a guarantee of future results.

Markets mentioned in this article: Cocoa (London and New York), raw sugar, white sugar, arabica coffee, robusta coffee, Malaysian palm oil.