El Niño Disrupts Global Commodity Supplies Through 2027
Manufacturers should prepare for ongoing price volatility across key food categories as supply risks persist.
Updated on Oct. 15, 2026 in Agriculture
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The National Oceanic and Atmospheric Administration projects a strong-to-very strong El Niño event to continue through March 2027, triggering significant volatility in global agricultural commodities. Manufacturers are adjusting procurement and hedging strategies to manage price hikes for items ranging from fishmeal to cocoa.
Why it matters
Unusually warm Pacific Ocean temperatures are creating systemic production stress across key agricultural regions, driving up operational costs for buyers. Businesses must now account for climate-driven commodity premiums that are already being priced into deferred contracts.
Fishmeal prices have more than doubled year on year, while fish oil costs have increased over threefold since July 2025. Markets are also bracing for a 9% rise in cocoa prices and a 5% increase in US soybean oil costs.
The players
National Oceanic and Atmospheric Administration
The U.S. federal agency responsible for weather monitoring and climate projections.
The details
El Niño creates broad production disruptions by altering rainfall and temperature patterns in regions essential for global food supplies. Manufacturers are responding by diversifying their geographic sourcing and utilizing deferred contracts to mitigate the risk of price spikes. This hedging activity reflects an attempt to stabilize costs as the industry faces structural production risks in cocoa, robusta coffee, palm oil, and sugar.
Timeline
July 2025: Starting point for the surge in fish oil prices.
Next 90 days: Window of heightened procurement risk for commodity buyers.
January to March 2027: Period of projected strong-to-very strong El Niño intensity.
2027: Year of potential peak risks for sugar and palm oil production.
2027/28: Crop cycle currently affected by weather risk concerns.
Market Landscape
The current commodity market volatility follows the pattern of supply chain stress identified by the National Oceanic and Atmospheric Administration's El Niño monitoring framework. This development marks a significant challenge to global food procurement stability compared to more stable recent growing cycles.
Operators should review their supply contracts for exposure to commodity price volatility, specifically for palm oil, sugar, and cocoa. Consider diversifying supplier locations and locking in rates through deferred contracts to mitigate the risks associated with the next 90 days of market uncertainty.
The takeaway
El Niño is creating a predictable window of supply stress that necessitates proactive contract management. Review your procurement portfolio against current weather projections and track the expected 2% to 9% price increases for key ingredients like rapeseed, soybean oil, and cocoa.
Further reading
For more on industry-wide supply trends, see the latest analysis in Agriculture.
Source note: This article includes information reported by Foodingredientsfirst.
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