18.05.2026 20:11
The El Nino weather event, expected to be effective in July, is anticipated to create a new agenda in the commodity market by affecting global temperature and precipitation patterns. Experts indicate that risks are increasing for agricultural products such as palm oil, cocoa, cotton, and rice, and potential price hikes are on the horizon.
The El Nino event, which is likely to occur from mid-2026, is expected to affect global temperature and precipitation patterns.
NEW AGENDA IN COMMODITY MARKETS: EL NINO
Although climate models have indicated neutral conditions since the beginning of the year, El Nino-related effects are being monitored in the following period. The El Nino weather event, which occurs in the Pacific Ocean, causes temperature increases primarily in coastal regions and then worldwide. La Nina, which can be described as the opposite, signifies colder weather conditions globally. During the transition period between these two weather events, neutral, i.e., natural, weather conditions prevail.
With these developments, while the El Nino weather event is expected to become effective in July, it is considered that a new agenda may emerge in the commodity markets with increasing concerns about the effects of this weather event.
“DROUGHT BEGINS IN ASIA AND AUSTRALIA”
Zafer Ergezen, a specialist in futures and commodity markets, stated in his assessment that the probability of El Nino occurring in July has risen above 80%. Expressing that this is a very serious rate, Ergezen emphasized that looking at the winter season, this probability exceeds 90%.
Noting that sea surface temperatures are rising, Ergezen made the following evaluations: “When we look at this, the models also show us that the El Nino effect will be seen. In short, to explain what El Nino is, it originates from heat changes in the ocean. When we examine it, the warming of the oceans worldwide, especially the decrease in winds blowing towards America, increases water temperatures in the Pacific Ocean towards America. This means a bit more drought. We can say a warmer period is experienced, especially on the American side. We can also see that the Asian side is warming, and its precipitation is decreasing. On the American side, conversely, there can be more floods and rain. So, in such a period, we can expect the following: rains decrease in Asia and Australia, and droughts begin. On the American coasts, we can say the opposite occurs, rainfall increases. In Africa and India, the timing of seasons is disrupted.”
RISKS STAND OUT IN PALM OIL, COCOA, AND COTTON
Ergezen stated that special attention should be focused on Asia. He noted that Indonesia accounts for approximately 60% of the global palm oil supply, and palm oil production in Malaysia is also very strong, highlighting the importance of weather changes in these countries.
Emphasizing that there is also a risk of the El Nino effect spilling over to other vegetable oils such as soybean and sunflower oil, Ergezen recorded the following: “On the other hand, based on past experiences, we have seen that cocoa production has decreased during every El Nino event in the last 50 years. We may see the effects on cocoa production not this year but in 2027. Therefore, it is possible to say that price increases are likely again in the cocoa sector. Because this El Nino is expected to be somewhat stronger than previous ones. From the production perspective, we can say that the India-Pakistan effect is important on the cotton side. In India, due to monsoon delays and temperatures, insect infestation in cotton could be significant, which may cause volatility in cotton.”
VOLATILITY MAY ALSO BE SEEN IN RICE PRICES
Ergezen stated that rice is one of the products that could be affected by the El Nino weather event. He noted that weakening rainfall in Thailand and Vietnam, among the world's leading rice producers, could lead to volatility in rice prices. “We have talked about the negatives, but on the other hand, we can say there will be an increase in soybeans, for example. Looking at previous periods, whether in America or Argentina, soybean production in these regions has increased. So, we can also see that,” he said.
Ergezen mentioned that this year could be a strong El Nino year. Therefore, Ergezen said that drought concerns are important, noting that volatility may be observed in agricultural product prices, and it should not be forgotten that risks are particularly upward for agricultural commodity prices.
“EL NINO EFFECT WILL BE STRONG IN THE UPCOMING PERIOD”
Ergezen made the following assessments: “When we look at it, perhaps one of the most important indicators for us will be the monsoon period in June and September. India is important in this regard. We will be following that. The rainfall there will show us expectations for products like cotton, sugar, rice, and palm oil. If it is a normal monsoon, risks will decrease, but if the monsoon effect is weak, if we see a weak monsoon period in India, that would be a leading signal. It means the El Nino effect will be strong in the upcoming period.”