According to a quarterly commodity outlook report from StoneX, the rapidly intensifying El Niño phenomenon is set to be the primary climatic factor influencing global agricultural production in the third quarter of 2026. Elevated temperatures combined with altered rainfall patterns are increasing the risk of adverse impacts on key crops across major global production regions.
Data from various international climate forecasting agencies indicates that conditions shifted from neutral to a weak El Niño between March and May, with the phenomenon expected to intensify further in the coming months. The World Meteorological Organization (WMO) predicts that sea surface temperature anomalies in the equatorial Pacific will approach 2.0°C, reaching a strong El Niño classification.
Altered Rainfall and Atmospheric Circulation
Abnormally warm water in the tropical Pacific disrupts global atmospheric circulation, shifting cloud distribution and subsequently altering rainfall allocation patterns for major agricultural zones. Beyond the Pacific, climate patterns in the Indian and Atlantic Oceans in the latter half of the year are also expected to significantly influence global weather.
Carolina Giraldo, a market intelligence analyst at StoneX, stated, "The El Niño phenomenon is forecast to strengthen further in the third quarter, significantly elevating climate risks across multiple key agricultural regions. El Niño reshapes global temperature and rainfall distribution, requiring heightened vigilance from growers and commodity market participants."
Anticipated Impacts on South America and Brazil
The influence of El Niño on South America is projected to become more pronounced in the coming months. The region experienced volatile rainfall in the first half of the year, with above-average precipitation in June. Industry focus will be on soil moisture recovery in central-western and southeastern Brazilian production areas in August and September, as adequate water content is crucial for the successful planting of summer crops.
Analysts note that September is a critical window for soybean planting in Brazil. Intermittent rainfall could lead to planting delays and poor seedling establishment.
Carolina Giraldo added, "Brazilian soybean planting peaks in September. High temperatures combined with uneven rainfall can lead to uneven seedling growth, significantly suppressing potential crop yields."
Elevated Temperatures and Heatwaves
In addition to disrupted rainfall, temperatures across most continents in Q3 are expected to exceed historical averages, significantly raising the likelihood of heatwaves in key agricultural regions of South America, North America, Asia, and Oceania.
Countries including Brazil, Paraguay, Bolivia, Argentina, Peru, the United States, India, China, and Australia warrant particular attention for high-temperature risks. Climatic conditions in cocoa-growing regions of West Africa, such as Ghana and Côte d'Ivoire, are also expected to deteriorate.
Analysts explained, "Sustained high temperatures increase crop water consumption and accelerate the growth cycle. When critical stages like flowering and grain filling coincide with heat and water stress, yield reductions are highly likely."
Crop-Specific Impacts of El Niño
The effects of El Niño vary depending on the crop type and its specific growth stage.
For coffee, the harvest in Brazil is concentrated from July to August. Forecasts indicate a high probability of above-average rainfall during this period, which could impact the drying process and final bean quality. By September, industry focus will shift to the coffee flowering stage, which requires a suitable balance of humidity and temperature.
Regarding sugar crops, the central-southern region of Brazil is guarding against the risk of harvest interruptions due to excessive rainfall. Sugar-producing nations like India and Thailand, however, require stable rainfall to support sugarcane growth and establish a foundation for the next crushing season.
The cotton market also requires close monitoring of climate shifts. India may face planting challenges due to erratic monsoon rains, while Chinese cotton regions could suffer from sustained heat. Overall growing conditions for U.S. cotton appear favorable, but high temperatures remain a significant concern.
Wheat risks are diverging between hemispheres. Southern Brazil faces the threat of excessive rainfall promoting disease. In contrast, Australian wheat is more susceptible to water stress due to El Niño-induced drier conditions. High temperatures in the Northern Hemisphere can accelerate wheat maturation and damage grain quality.
Cocoa is one of the commodities most vulnerable to climatic fluctuations this quarter. Rainfall distribution in West Africa and Indonesia is expected to become highly uneven, increasing the risk of water stress during critical growth phases. Growers in southern Bahia, Brazil, are closely monitoring the potential El Niño impact. The situation in Ecuador differs, where increased rainfall may benefit vegetative growth but also raises the probability of crop diseases.
The Link Between Climate and Agricultural Output
StoneX points out that the ultimate impact of El Niño on agricultural production depends on the combined effects of temperature, precipitation, and the specific agricultural stage. Regions experiencing both low rainfall and high temperatures face the highest risk of crop drought stress. Areas with excessive rainfall may encounter issues like hindered farming operations, delayed harvests, and increased disease incidence.
Carolina Giraldo concluded, "It's important to clarify that climate forecasts are probabilistic assessments, not certain predictions of disaster, but they can identify high-risk production areas. Continuous monitoring of planting and crop growth conditions from July to September is essential, as the combination of high temperatures and imbalanced rainfall can simultaneously affect seedling establishment and final yields."
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