Super El Niño Threatens Global Food Supplies Peru at Risk

The world is underestimating the threat of an approaching “super El Niño,” a climate event poised to disrupt global food supplies and economies. While discussions focus on energy costs and oil prices, the implications for agriculture and emerging markets remain largely unaddressed, despite scientific consensus that this event could be historic.

A Climate Event of Historic Proportions

The US National Oceanic and Atmospheric Administration (NOAA) projects an 81% chance of a “very strong El Niño,” defined as Pacific Ocean temperatures rising more than 2°C above seasonal averages. However, Australia’s Bureau of Meteorology forecasts an even more extreme scenario, with temperatures potentially reaching 3.5°C above average—surpassing the 2015 peak of +2.6°C. This unprecedented warmth is expected to intensify weather patterns, leading to more severe droughts, floods, and storms that will further strain agricultural productivity across multiple regions. The warming Pacific is anticipated to trigger intensified weather events across South America, with particular concern for Australia’s agricultural sector. Brazilian corn production may drop by 10% under the extreme conditions projected by meteorological models.

This warming will trigger extreme weather globally, with severe consequences for agriculture. The southern hemisphere’s planting season is already underway, and early signs indicate significant disruptions. In Peru, a key exporter of blueberries and anchovies, GDP growth could slow by over one percentage point due to flooding, supply chain breakdowns, and reduced crop yields. The disruption in Peru’s blueberry exports could lead to higher prices for consumers in regions heavily reliant on imported berries, while reduced fishmeal output may increase costs for aquaculture and livestock feed globally.

Peru’s Global Ripple Effects

Peru’s role in global food systems is outsized. In 2025, the country exported over $2.5 billion worth of blueberries, making it the world’s largest supplier. A sharp decline in production during El Niño would directly impact fruit availability and prices worldwide. Equally critical is Peru’s anchovy fishery, the largest by volume globally. Warm El Niño waters stress the fish, driving them deeper into cooler currents and rendering them infertile.

This could eliminate at least one of Peru’s two fishing seasons, threatening local livelihoods and global fishmeal supplies. Peru produces 20% of the world’s fishmeal, a key feed for aquaculture and livestock. Reduced output could raise fish prices in supermarkets worldwide, adding pressure to already volatile food markets. This fishmeal shortfall may also drive up the cost of animal feed in countries heavily dependent on aquaculture, such as Norway and Chile, further amplifying global protein price pressures.

National statistics, J.P. Morgan, June 2026. Latest data available. Information is subject to change and is not a guarantee of future results.

East Africa confronts serious shortages of staple grains as changing precipitation patterns disrupt traditional farming cycles. The combination of drought and flooding will strain regional food security, with inflation spreading through markets that rely heavily on imported grain. The juxtaposition of drought and flooding within the same region can create compounded challenges, as one area may suffer from lack of water while another deals with excess, further destabilizing food distribution networks. Countries like Egypt and South Africa stand to experience the most direct impacts from these supply disruptions.

Global Food Price Inflation Effects

Food prices constitute a larger portion of inflation baskets in many emerging economies than energy costs, particularly across Asian markets. This dynamic means that nations including China, Indonesia, Taiwan, Thailand, and Vietnam will feel price pressures similar to those already experienced in Latin American countries traditionally vulnerable to El Niño effects. The heightened sensitivity to food inflation in these Asian economies could prompt central banks to accelerate monetary tightening, potentially leading to currency depreciation and capital outflows as investors seek safer havens.

The UK faces increased import costs due to its heavy reliance on food imports, making it susceptible to global price fluctuations. The Panama Canal’s ongoing water level challenges will further exacerbate logistics costs, with the Financial Times reporting on August 11th that both the cost and frequency of transits are expected to rise, adding another inflationary pressure to global supply chains. As the southern hemisphere enters its planting season, these agricultural disruptions will become increasingly visible in market data and consumer prices.

Investment opportunities emerge in fixed-income instruments, currency markets, and agricultural commodities as central banks respond to rising food costs. The potential for inflation-driven interest rate increases creates both risks and strategic positioning possibilities for investors monitoring the developing situation. The Panama Canal’s logistical constraints, alongside food supply disruptions, may also create opportunities in logistics and transportation sectors as companies adapt to new trade routes and shipping methods.

Local currency bonds in affected regions may experience volatility as policymakers address food security concerns. The interplay between food supply constraints and monetary policy decisions will likely shape market movements throughout 2027. However, as always, there is a silver lining, which is that disruption brings opportunities as well as risks. Investors in agricultural commodities have a fascinating year ahead. Rising inflation should mean a concomitant rise in rates, which will have a significant impact on currencies and local-currency bond markets. There will also be idiosyncratic stories driven by extreme weather.

For instance, the last El Niño caused very heavy flooding in southern Brazil in May 2024, destroying crops and local businesses. In turn, this caused fears of a major deterioration in asset quality for the local bank, Banco do Estado do Rio Grande do Sul (BRSRBZ), whose outstanding bond price dropped to 89. The relatively few investors who followed the name saw how swiftly the government reacted with a support package for the state and bought the bond near its lows. It was called at par on time early this year. It would be a major surprise if we don’t see further such opportunities emerge this time around.