El Niño 2026–27: Why the Global Grain Industry Is Watching Closely

The global grain industry is entering a period in which weather could become an increasingly important market driver.

El Niño is strengthening across the Pacific, with the U.S. National Oceanic and Atmospheric Administration (NOAA) now indicating a greater than 90% probability of a very strong El Niño during the Northern Hemisphere fall and winter of 2026–27. NOAA also estimates a 75% probability that the October–December 2026 period could see an event stronger than previous El Niño episodes recorded since 1950.

For grain markets, however, the key question is not simply whether El Niño will reduce global crop production.

The more important question is how it could redistribute production risks between major agricultural regions and alter global trade flows.

A changing production map

El Niño is associated with changes in temperature and precipitation patterns across different parts of the world. Its agricultural effects are therefore far from uniform.

Some regions may experience hotter and drier conditions, while others may receive more rainfall than usual. The result can be a changing global production map in which losses in one exporting region may be partly offset by stronger crops elsewhere.

This distinction is particularly important for internationally traded commodities such as wheat, maize and rice.

Australia is already one of the markets attracting attention. The country is a major wheat exporter, and below-average rainfall associated with the developing El Niño has contributed to concerns over its 2026 wheat outlook. FAO's June and July assessments also pointed to lower global wheat production, with Australia among the major producing regions contributing to the decline.

At the same time, the outlook is not uniformly negative across the world. Production prospects in parts of South America can benefit from El Niño-related weather patterns, illustrating why global grain markets cannot be assessed by looking at a single producing country.

Wheat in the spotlight

Wheat is likely to remain one of the most closely watched commodities during the 2026–27 El Niño cycle.

Australia's role in supplying Asian and other international markets means that a significant production decline could change sourcing patterns for importers. Meanwhile, crop conditions in the United States, Europe, South America and the Black Sea region will determine how much additional export capacity is available elsewhere.

The latest FAO outlook already anticipates global wheat production declining in 2026/27, although production is still expected to remain at a historically high level.

This means that the market may not necessarily face an immediate global shortage. Instead, the more likely concern is greater competition for exportable supplies and increased volatility between origins.

Beyond wheat: maize, rice and feed markets

The implications of El Niño extend well beyond wheat.

Maize production across the Americas will be particularly important for the feed industry, while weather developments in Asia could affect rice production and other agricultural commodities.

For feed manufacturers, the connection is direct. Changes in maize and soybean production can influence raw-material availability and prices, which then feed into livestock and poultry production costs.

The impact can therefore move through the supply chain:

Weather → Crop Production → Grain and Oilseed Prices → Feed Costs → Livestock Production → Food Prices

FAO and WFP have already highlighted the potential humanitarian and agricultural consequences of a strong 2026–27 El Niño across multiple regions, while FAO analysis indicates that drought risks linked to the phenomenon could affect areas supplying important staple crops.

Trade flows may matter more than total production

For the international grain business, perhaps the most important consequence of El Niño will be its potential effect on trade flows.

If production declines in one major exporting country while another achieves a stronger harvest, importers may change their sourcing strategies. This can affect:

• Export competitiveness
• Freight demand
• Origin premiums
• Stock levels
• Milling wheat availability
• Feed grain costs
• Regional food prices

This is why a weather event in one part of the world can influence grain markets thousands of kilometres away.

The Black Sea will also remain a critical part of this equation. Weather-related production risks are developing alongside geopolitical and logistical uncertainties affecting one of the world's most important grain-exporting regions. The interaction between these factors could prove more significant than any single risk in isolation.

The importance of quality and not only volume

For the milling industry, the impact of El Niño should also be considered beyond production volumes.

Weather conditions can influence wheat quality characteristics, including protein levels, test weight, moisture and other parameters important for milling performance.

Consequently, even if global wheat production remains relatively strong, changes in the quality and geographical distribution of available wheat could increase the importance of blending strategies and origin selection for millers.

What should the grain industry watch?

As the 2026–27 El Niño develops, several indicators will deserve close attention:

Australia: rainfall and wheat crop conditions.

United States: winter wheat establishment and subsequent growing-season conditions.

South America: wheat, maize and soybean production prospects.

Asia: rainfall patterns affecting rice and other staple crops.

Black Sea: production, exports and logistics.

Global stocks: the level of available inventories that can absorb potential supply disruptions.

These indicators will help determine whether El Niño remains primarily a source of market uncertainty or develops into a more significant supply-side shock.

A market story, not simply a weather story

El Niño should not be interpreted as a simple forecast for higher grain prices or lower global production.

Its impact will depend on the interaction between weather, crop conditions, global stocks, trade policies, geopolitics, energy and fertilizer costs, logistics and demand.

For the global grain industry, the central question is therefore not simply:

Will El Niño reduce global grain production?

It is:

How will El Niño change where grain is produced, where it is available for export, and how global buyers source their supplies?

That question will become increasingly important as the 2026–27 crop cycle develops.

Next in the series: Wheat — examining the major producing and exporting regions and the potential risks facing the global wheat market.

This article is the first part of Grain Chronicle's five-part series, “El Niño 2026–27: Global Grain Market Outlook.”