The growing consensus that an exceptionally strong El Niño could develop this year is raising concerns across global agriculture. Still, the impact is unlikely to be uniform across commodities.
That conclusion emerges from two recent studies. One, by consultancy Cogo Inteligência em Agronegócio, led by analyst Carlos Cogo, estimates that the weather phenomenon could put as much as 30% of global agricultural production at risk, while increasing the likelihood that 2027 becomes the hottest year on record.
A separate report from Bradesco BBI assesses the potential implications for global agriculture and Brazil. Analysts Henrique Brustolin and Giovanni D’Ottaviano cite forecasts from the U.S. climate agency indicating a 63% probability of a very strong El Niño event—“a rare occurrence seen only four times in the past 45 years.”
Using global crop production data dating back to 1982, the bank analyzed how major crops performed during previous intense El Niño episodes to build scenarios for the 2026/27 season. The findings suggest that some of Brazil’s key agricultural products, including soybeans and sugar, could benefit from the phenomenon.
Soybeans
For soybeans, Bradesco BBI’s analysis points to a modest positive effect, with global yields historically increasing about 1% during strong El Niño years. By contrast, La Niña episodes showed no meaningful impact.
Even a small productivity gain could help cap upward price pressures, particularly against a backdrop of expanding planted area and a more balanced supply-demand outlook than in other grain markets, according to the bank.
The weather pattern could also improve market fundamentals. Bradesco BBI now projects a soybean surplus of 4.5 million metric tons for the crop year, compared with an estimated deficit of 600,000 tons before forecasts shifted toward a stronger El Niño.
Brazil’s historical data likewise points to a 1% increase in yields, though regional disparities could be significant.
In southern Brazil, yields tend to improve as rainfall arrives earlier and in greater volumes, reducing the risk of water shortages. Elsewhere, however, El Niño has been associated with a higher risk of drought in the Northeast and more uneven rainfall distribution in the Center-West, potentially forcing some producers to replant.
In northern Brazil and the Amazon region, soybean crops could face severe drought conditions, including critically low river levels, according to Cogo. He estimates that losses in the Matopiba region and the Center-West could outweigh gains in the South, resulting in a net production decline of between 3 million and 8 million tons.
Outside Brazil, Bradesco BBI estimates that yields in the U.S., the world’s second-largest soybean producer, could rise 2%, while Argentina could see gains of as much as 8%. Historical data suggests little impact on Chinese production.
Corn
The outlook for corn is also broadly positive. Historical patterns analyzed by the bank indicate a 1% increase in yields globally and in Brazil. However, the report notes that the growing importance of Brazil’s second corn crop, or safrinha, may make historical comparisons less reliable.
As with soybeans, regional differences stand out. In southern Brazil, both first- and second-crop corn have shown a positive correlation with El Niño conditions. In the Center-West, however, second-crop yields tend to weaken as the likelihood of moisture deficits rises. In the Northeast, the relationship is strongly negative.
Brazil’s corn sector faces an additional challenge: the safrinha, which accounts for roughly 80% of national production, could be affected if delayed rains in the Center-West shorten the planting window.
Risks could extend into 2027, creating downside cost pressures for livestock producers and corn ethanol plants.
Historically, strong El Niño events have boosted U.S. corn yields by about 4%, while Argentina has recorded gains of up to 8%. In China, however, comparable events have reduced yields by around 1%.
Bradesco BBI sees only a limited direct impact on international corn prices. Even so, the bank maintains a bullish market outlook, citing reduced U.S. acreage, rising demand from livestock feed and biofuels, and higher production costs.
On supply and demand, the bank expects El Niño to ease market tightness but not eliminate it. It estimates the current season’s deficit at 3.2 million tons, sharply below the 22.1 million-ton shortfall projected before forecasts pointed to a stronger climate event.
Sugarcane
For sugarcane, Bradesco BBI found that very strong El Niño episodes historically increased Brazilian yields by about 4%, while reducing productivity in India by roughly 1%.
The focus on Brazil and India reflects their importance to global sugar markets. Brazil accounts for 24% of global supply, while India contributes 16%.
In Brazil, historical data points to a 4% increase in sugarcane yields per hectare, with gains reaching 5% in the Center-West and Southeast. Interestingly, however, recoverable sugar content has historically fallen by an average of 2%.
According to the bank, the key variable will be the pace of harvesting in Brazil’s Center-South region, which accounts for more than 90% of national cane crushing. Excess rainfall could disrupt field operations and slow harvest activity, forcing some cane to be carried over into the following season.
Bradesco BBI also expects mills to favor sugar production over ethanol, following a 23% decline in domestic ethanol prices in April that left the biofuel trading at an 11% discount to sugar.
The bank is less convinced by the widely held view that El Niño will significantly boost sugar prices. While the weather pattern may weigh on production in India, analysts argue that the country’s influence on global sugar trade is no longer as clear-cut as it once was.
Cogo takes a more bullish stance. He estimates that a very strong El Niño affecting both India and Thailand could drive sugar prices to 24 cents per pound, compared with roughly 13 cents today. Such a scenario would be highly favorable for the industry at a time of tight margins. Brazil, he argues, could benefit as a strategic residual supplier to global markets.
Coffee
Coffee is among the crops most vulnerable to El Niño, both in Brazil and globally, according to Cogo.
He sees elevated risks for arabica production in the Cerrado Mineiro and southern Minas Gerais regions, where drought conditions during flowering could disrupt the crop’s natural biennial production cycle and increase the risk of flower abortion.
High risks are also expected for arabica and robusta plantations in Bahia, as well as robusta-growing areas in Rondônia, where prolonged water stress is a concern. Espírito Santo, the Triângulo Mineiro region and São Paulo face more moderate risks.
Globally, Cogo identifies significant exposure across Asia and Africa. Robusta-producing areas in Vietnam and Indonesia, along with arabica regions in Ethiopia, Kenya and Uganda, could all be affected by extended drought conditions.
This story was translated with the assistance of artificial intelligence.
