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Effect on food supply
In 2022 , global food production was significantly affected by severe drought in the US , Europe and Argentina . In fact , last year was the sixth warmest year since 1880 , despite it being the third successive year of La Niña , which is known for lowering global average temperatures .
It is anticipated that the arrival of El Niño in 2023 will cause a significant rise in the world ’ s average temperature – pushing the world past a key 1.5 degree Celsius warming milestone – which in turn may affect the crop development and yields of various soft commodities .
Wheat One commodity set to be impacted by the weather event is wheat . Depending on the intensity of El Niño , global wheat production could fall anywhere between two and five percent . The dry conditions in Australia , one of the largest wheat exporters , are expected to lead to a fall in the nation ’ s wheat output . In contrast , output in the US and Canada may benefit from the heavy rains El Niño brings .
However , the considerable amount of rain may also increase water levels in the Mississippi River – a major shipping route which exports roughly 60 percent of North American grains . This could cause a series of logistical challenges , leading to a drop off in US export shipments .
Historically , El Niño has negatively affected both palm oil and cocoa output . In 2015 , forest fires in Indonesia spread rapidly due to drier-than-normal weather owing to the severe El Niño . This created heavy haze throughout Southeast Asia , reducing the amount of sunlight reaching trees , thus stunting palm fruit growth . In terms of cocoa , prices rallied to 12-year highs in 2016 after the weather event caused a drought in key producing countries , hampering global production .
Palm oil and cocoa There is also significant concern that El Niño could undercut global palm oil and cocoa production . The dry conditions expected throughout much of Africa and Asia will negatively impact the supply of the two soft commodities . For example , palm oil outputs in Indonesia and Malaysia could retreat by anywhere between three and five percent , while hot and dry conditions in West Africa are projected to reduce cocoa output in two of the largest producing countries – Ivory Coast and Ghana .
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