Pricing the Storm: The $342 Billion Agribusiness Risk of Super El Niño

This summer’s looming ‘Super El Niño’ threatens to push an already fragile food industry to the brink. Dr Andrew Coburn, Chairman, and Oliver Carpenter, Head of Environmental Analytics, at Risilience, reflect on new analysis that quantifies the potential financial impacts of the impending weather system.

Forecasters are worried: while El Niño is part of our routine weather cycle, signals suggest the El Niño developing in the coming months could be particularly potent, attracting headlines warning of ‘Super’, ‘Supercharged’, and, even, ‘Godzilla’ El Niño. We are likely to see the hottest year ever recorded next year. Weather anomalies are projected to intensify from this summer, peak during the winter, and weaken by the second half of next year, though systemic effects may persist, affecting the availability and pricing of agricultural goods into 2027 and 2028.

A looming, record-breaking El Niño threatens to devastate agribusiness margins, impact the profitability of food producers, retailers and farmers, and hit consumers with unprecedented food price hikes.

Quantifying the Potential Impact of the Impending El Niño

Risilience has combined the forecast data for the likely El Niño weather patterns with our models of agricultural science and market dynamics to assess the potential impact of the event over the next two years. We have developed three scenarios for companies to stress test the possible business impacts across a range of potential El Niño severity levels.

Our El Niño 2026: Agribusiness at Risk analysis assesses multiple plausible outcomes with three scenarios, depending on how severely the event could play out:

What is the potential financial impact of a Super El Niño?

Risilience estimates the global value of lost production, at 2025 prices, could hit $342.2 billion. Our scenario for an Extreme El Niño indicates price shocks of 10% to 50% across core commodities, with highly exposed crops, including rice, palm oil, sugarcane, and coffee, potentially experiencing surges of 50% to 100%, or more.

Foodstuffs Most at Risk

Risilience has modeled the financial impact to 11 raw materials from all three levels of El Niño. Crops most at risk, due to their geographic concentration in regions facing weather extremes and vulnerability to heat and drought, include rice, palm oil, sugar cane, wheat, coffee, cocoa, and potatoes. Localized impacts also affect markets of meat production, dairy and eggs, which are mainly consumed in the region of their production.

Market disruption and price shocks

Because demand for basic staples is inelastic – consumers must eat regardless of cost – even small supply deficits cause disproportionate price surges.

Past price shocks have typically been restricted to one commodity at a time, enabling substitution to mitigate supply shortages. A simultaneous, cross-category surge means consumers will be hit harder and broader than ever before – price shocks will be felt across many of the core items in the consumer’s shopping basket at the same time.

Worryingly, market effects could cascade. Price impacts can be heavily amplified by market panic, speculative trading, and government interventions. If El Niño triggers major shortfalls in rice production, it is possible that the governments of India, Vietnam and Thailand could enact export bans to feed their own populations, removing millions of tonnes from the global market and causing prices to escalate.

How can Companies Mitigate Impact from a Super El Niño?

Forward-looking businesses that rely on agricultural raw materials will already have this year’s El Niño on their radar. The CEO of Barry Callebaut, one of the world’s top cocoa producers, has warned that this summer’s El Nino “could drive up cocoa bean prices by a few thousand pounds per ‌metric ton”.

A Super El Niño will compound existing climate risks, serving as a critical wake-up call for leaders to act – identify the impacts and instigate a range of measures to reduce financial shocks. Short-term measures to mitigate near-term financial risks include price hedging, substitution, and product portfolio management, which can protect margins when El Niño strikes. Longer-term interventions, which constitute the “resilience building” activities, include regenerative agriculture and enduring supplier partnerships.

Secure the resilience dividend to flourish

In a world of permanent climate volatility, survival is no longer about enduring the next storm. It requires shifting from reactive crisis management to building a proactively resilient business model.

Leading companies are securing a ‘resilience dividend’ – a strategic moat that protects earnings during severe shocks. Winning strategies don’t choose between diversifying supply chains or investing in resilient agriculture. They integrate both into a single, cohesive framework to maximize de-risking.

A Super El Niño can trigger global, correlated crop failures that completely bypass traditional diversification. But for climate-resilient companies, this systemic crisis unfolds differently. By securing predictable, long-term supply relationships, they transform catastrophic volatility into a sustainable competitive advantage.