"The 'strongest El Niño' is coming? Global agricultural supply chain faces further challenges."

A scientific agency has issued the strongest El Niño warning in 75 years, as the global agricultural supply chain faces multiple overlapping shocks.

The U.S. Climate Prediction Center (CPC) warned that the currently developing El Niño event has an 81% probability of becoming "very strong" and a 97% chance of persisting until early spring 2027.

According to the Global Times, experts from the European Centre for Medium-Range Weather Forecasts also issued an alert, stating that the overall intensity of this year's El Niño phenomenon could set a new record. Multiple countries have begun strengthening their response measures, with the Panama Canal Authority planning to reduce the maximum draft for ship locks, putting the global trade channel under potential pressure.

Goldman Sachs commodity research analyst Lina Thomas pointed out that the high concentration of global agricultural supply in a few regions makes agricultural markets highly susceptible to local weather, geopolitical, and policy shocks, with protectionist policy responses being a key source of upside risk for agricultural prices. Vegetable oil prices have already shown signs of rising, and market concerns over food supply chains are intensifying.

Climate Signal: Strongest El Niño in 75 Years Taking Shape

The Climate Prediction Center under the U.S. National Oceanic and Atmospheric Administration (NOAA) stated in its latest report that sea surface temperatures in the equatorial central and eastern Pacific have already exceeded normal levels by at least 1°C, with some regional deviations reaching as high as 2.7°C last week.

The El Niño Southern Oscillation (SOI) Index has now fallen to its lowest level since 2005, indicating a pressure pattern consistent with El Niño—weakening trade winds in the Pacific and persistently warm sea surface temperatures in the central and eastern Pacific.

The CPC stated that this event has an 81% probability of developing into a "very strong" level, ranking among the largest El Niños on record since 1950, and a 97% chance of persisting until early spring 2027.

According to the Global Times, experts from the European Centre for Medium-Range Weather Forecasts said on the 7th that the overall intensity of this year's El Niño phenomenon could set a new record, with the risk of droughts, floods, and other extreme weather events continuing to rise globally. The World Meteorological Organization's recent data update showed that between July and September 2026, El Niño is expected to strengthen rapidly, with the seasonal average sea surface temperature anomaly in key monitoring areas expected to exceed 2°C, meeting the standard for a "strong El Niño."

AFP reported, citing climate expert Tim Stockdale, that this year's El Niño phenomenon differs markedly from observations over the past 30-plus years and could be extreme, with models offering rare but consistent predictions for this event. University of Michigan climate and space science professor Richard Rood also told CNN: "All signs point to this being a very strong El Niño."

High Supply Concentration Highlights Agricultural Market Vulnerability

Goldman Sachs commodity research analyst Lina Thomas warned in her report that global agricultural supply is geographically highly concentrated.

Taking major crops such as soybeans, corn, rice, sugar, and palm oil as examples, the top three exporting countries together account for 60% to 90% of global trade volume. This means that any local weather anomaly, geopolitical event, or policy change could have a disproportionate impact on global supply.

Lina Thomas further noted that as major agricultural exporting countries increasingly prioritize domestic food and energy security through export restrictions and biofuel policies, even minor supply disruptions—or merely the fear of them—can trigger policy responses, leading to actual reductions in exportable supply far exceeding the original production shock. Import-dependent countries may then adopt hoarding and self-sufficiency strategies, further fragmenting global trade, reducing market liquidity, and amplifying price sensitivity to future shocks.

Three Near-Term Risks Stacked, Protectionism Could Amplify Prices

Vegetable oil prices have already shown signs of rising, seen as one of the early signals in agricultural markets amid rising expectations of El Niño.

At the same time, Goldman Sachs highlighted three near-term supply risks in its latest analysis, arguing that even if their actual impact is limited, they could trigger precautionary policy measures by various countries, thereby amplifying price volatility.

First, El Niño conditions have already formed.

Goldman Sachs estimates a 63% probability that this El Niño will develop into a "super El Niño." Major exporters of staple crops such as rice, as well as biofuel crops like sugar and palm oil, have historically experienced more adverse weather during El Niño events. Even if the actual impact is limited, the early implementation of export restrictions could preemptively compress global available supply.

Second, rising energy prices could boost biofuel demand.

Higher energy prices and fuel security concerns in the first half of 2026 may prompt governments to increase biofuel blending mandates, further diverting crops such as sugar and corn from export markets toward domestic fuel production.

Third, the fertilizer market faces risks related to the Strait of Hormuz.

During the critical procurement window before the planting season for major nitrogen fertilizer importers (Q3), any renewed disruption in the Strait of Hormuz would impact the fertilizer supply chain, thereby affecting agricultural production costs and yield expectations.

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