El Niño 2026: Weather, Grain Stocks, and Fertilizer Risks Converge

What the Forecasts Actually Say

The official ENSO outlook has shifted decisively. NOAA's June 2026 assessment reports equatorial sea-surface temperatures well above average across the central and eastern Pacific, with atmospheric circulation anomalies consistent with an ongoing El Niño . The El Niño is expected to persist through the Northern Hemisphere winter, with a 96% chance of continuation into December 2026–February 2027 .

The strength outlook remains broad — NOAA assigns only a 37% probability to the very strong category as of mid-June, meaning weak through strong outcomes are still possible . But other forecast models are more emphatic: the IRI/CCSR ENSO plume assigns a 98% probability to El Niño conditions in May–July 2026, and the CPC noted that a "very strong" event is now the most likely single category .

The EU's Joint Research Centre (JRC) has also warned that agricultural production is threatened by the combination of El Niño and high input prices, with below-average harvest prospects already observed in parts of East Africa .

Which Crops and Regions Are Most at Risk

El Niño's agricultural effects are asymmetric. The JRC notes that the event drives "opposing weather patterns" across different regions: severe dryness threatens maize and rice across Central America, the Caribbean, and Colombia, while above-average rainfall is forecast for Bolivia, Ecuador, and Peru .

Based on historical patterns and current USDA projections, the most exposed commodities are:

Rice is the most closely watched crop. Weaker monsoon rainfall across India and Southeast Asia can quickly reduce production in a staple that remains critical for food security across emerging markets . USDA expects global rice ending stocks to decline by about 2% in 2026/27, leaving a thinner buffer if weather losses emerge .

Corn faces a sharper stock drawdown. USDA projects global corn ending stocks will decline by about 7% in 2026/27, making corn one of the more exposed major grains if growing conditions deteriorate . Global coarse grain supply is projected at 2,156 million metric tons, down 15 million MT from 2025/26, while use is expected to rise .

Wheat is somewhat less exposed, with USDA projecting a 2% decline in global ending stocks, but the trajectory is still downward .

South American corn and soybeans face a timing risk. Current harvests are described as largely favorable, but upcoming El Niño conditions could create opposing weather patterns for the next planting cycle .

Palm oil production in Southeast Asia is vulnerable to drought conditions, which could reduce yields in Indonesia and Malaysia .

Cocoa has a strong historical link to El Niño. Every strong El Niño in the past 55 years has reduced cocoa output, according to investment firm WisdomTree .

Coffee — particularly robusta — is also historically sensitive, as El Niño typically brings drier conditions to key growing regions .

East African crops are already showing stress. Tanzania's bimodal areas have below-average harvest prospects after seasonal rainfall deficits, and further output deficits are likely in late 2026 due to the upcoming El Niño .

The Grain Stockpile Buffer: Large but Shrinking

The main reason the 2026 El Niño may not cause an immediate food-price crisis is that global grain inventories entered the season at near-record levels. FAO forecasts world cereal stocks at the close of 2026 at 954.6 million tonnes, pointing to a 9.6% increase above opening levels and record inventories for wheat and rice . The global grain stock-to-use ratio is forecast at 31.8%, the highest since 2001 .

However, that buffer is projected to shrink over the 2026/27 season. USDA reports that large carry-in stocks help supplement supplies at the start of the year, but strong demand is expected to draw down global stocks for wheat (-2%), rice (-2%), and corn (-7%) . Coarse grain ending stocks are forecast at 309 million MT, down 20 million MT from the prior year .

This means the cushion is meaningful but not unlimited. If El Niño-related crop losses emerge, the market will absorb them from a stockpile that is already in decline.

The Fertilizer Wildcard

The Iran conflict has created a separate, compounding supply pressure. Since the start of military action in late February 2026, the near-total closure of the Strait of Hormuz has disrupted fertilizer shipments that represent 25% to 35% of globally traded ammonia and urea .

Urea prices surged by roughly 40% to over $700 per metric ton in the weeks following the attack, up from around $487 prior to the conflict . The head of Yara, one of the world's largest fertilizer companies, warned that global food supplies could face severe disruption if the conflict drags on .

The EU JRC frames the key risk as a combination effect: El Niño and high input prices operating simultaneously . Elevated input costs reduce farmers' ability to respond to weather shocks with fertilizer, irrigation, or other yield-protecting measures. When both factors align, the same weather shock can produce a larger market impact.

Citi Research's Commodities Outlook report states that "agriculture price risks are heavily skewed to the upside over the next 6-12 months," citing the dual threats of a prolonged Strait of Hormuz closure and El Niño-related poor weather . JPMorgan's analysis similarly warns that fertilizer supply is tighter just as El Niño threatens to add climate stress, increasing the risk of lower output and additional food inflation .

The Combined Food-Price Picture

The balance of risks is clearly tilted toward higher prices, but the timing and magnitude are uncertain. The table below summarizes the competing forces:

Forecasters from the World Economic Forum to the EU JRC have warned that the combination could produce a broader food-price shock across 2026/27 . The Interactive Brokers research desk notes that the worst of the supply impact has not yet shown up in data: fertilizer shortages take a full growing season to appear in yields, and El Niño's production damage typically peaks 6–12 months after the event itself .

Bottom line: Near-record global grain inventories provide a meaningful near-term buffer, but that buffer is projected to shrink as wheat, rice, and corn stocks decline. If El Niño becomes moderate-to-strong while input costs remain elevated, the combination could produce a broader food-price shock across 2026/27 — especially in crops and regions already exposed to rainfall deficits or shifting weather patterns.