El Nino and La Nina: which commodities they hit

Published 2026-09-05; updated 2026-09-05.

El Niño and La Niña are the warm and cool phases of a recurring shift in sea surface temperature and trade winds across the equatorial Pacific, known together as the El Niño Southern Oscillation. Neither is a storm or a season; each is a state of the ocean and atmosphere that persists for several seasons and rearranges where rain falls across the tropics.

For commodities the relevant fact is not the ocean but the map. A rainfall anomaly only matters to a world market if it lands where a large share of world production sits, and for several soft commodities it does.

How does a Pacific temperature shift reach a cocoa farm?

In the neutral state, trade winds push warm surface water westward, piling it up around Indonesia and the western Pacific. Air rises over that warm pool, which is why the region is wet, and sinks over the cool eastern Pacific, which is why coastal Peru is dry. This overturning loop is the Walker circulation.

During El Niño, the trade winds weaken and the warm pool spreads eastward. The zone of rising air moves with it. Maritime Southeast Asia and eastern Australia sit under sinking air and turn drier; parts of the eastern Pacific coast of South America turn wetter. During La Niña the winds strengthen, the warm pool packs further west, and the pattern broadly reverses. The knock-on shifts in pressure and storm tracks far from the Pacific are called teleconnections, and they are what carry the signal to West Africa, southern Africa and the Americas.

Three properties of that chain decide whether it shows up in a price. The first is concentration: a drier season in a region that grows 5% of a crop is noise, and one that grows half of it is not. The second is lag. Rainfall at flowering or during bunch formation affects a harvest one to three seasons later, so a market absorbs the news when the pods, cherries or fruit bunches fail to arrive, not when the rain does. Tree crops carry the effect longest, because a stressed tree yields less for more than one cycle.

The third is inventory. A shortfall meeting a full warehouse is absorbed; the same shortfall meeting a thin one is not, which is the stocks-to-use mechanism. World palm oil stocks-to-use fell from 25.3% in the 2021/22 marketing year to 18.8% in 2026/27 (USDA Production, Supply and Distribution), and a market with a thinner cushion converts a given weather event into a larger price move.

A Pacific rainfall shift becomes a world price event only where a large share of supply sits inside the affected belt.

A worked example

Do the exposure arithmetic for palm oil, the most concentrated of the major soft commodities. World palm oil production was 79.6 million tonnes in 2023, of which Indonesia produced 47.1 million tonnes, or 59.2%, and Malaysia 18.6 million tonnes, or 23.3% (FAOSTAT). Together that is 82.5% of world output, grown in two countries that sit directly under the western Pacific warm pool.

Now add the trade layer. In 2024 those two countries also supplied the bulk of the traded market: world exports of palm oil and its fractions were $43.8 billion, of which Indonesia shipped $21.1 billion, or 48.2%, and Malaysia $15.1 billion, or 34.4% (CEPII BACI). On the buying side, India imported $8.33 billion, or 19.0%. There is no third source of scale to switch to, so a supply disturbance in maritime Southeast Asia has to be resolved by price rather than by substitution of origin.

Finally the cushion. Palm oil stocks-to-use stood at 18.8% in the 2026/27 marketing year against 25.3% in 2021/22 (USDA PSD), and the World Bank Pink Sheet quoted Malaysian palm oil at $1,117 per tonne CIF Northwest Europe in August 2026, against a series high of $1,777 per tonne in March 2022. Those three facts describe how much of world supply a Pacific anomaly can reach, how few alternatives buyers have, and how much slack the system carries. They do not say what any particular phase will do.

Compare cocoa. Ivory Coast produced 1.89 million tonnes of the 5.22 million tonnes grown worldwide in 2024, or 36.2%, and Ghana 530,000 tonnes, or 10.1% (FAOSTAT). Concentration is similar to rubber’s, the growing region is different, and the teleconnection that reaches West Africa is weaker and less reliable than the direct effect over Indonesia. Exposure has to be assessed crop by crop.

Reading a phase without forecasting one

Three cautions keep this useful. Concentration is measured, but the strength of a teleconnection is not fixed: the same phase has coincided with very different outcomes in the same growing region in different decades. Timing matters more than magnitude, because a dry spell during flowering and the same dry spell after harvest have entirely different consequences. And the market prices expectations, so by the time a smaller crop is confirmed, much of the move may already sit in the price.

What the data supports is a map of vulnerability, not a prediction. The palm oil and cocoa pages carry the harvest calendars that say which months of rainfall matter for each, and why commodity prices spike sets out what happens once a shortfall meets a thin inventory.

Cite as: Commodity Origins, "El Nino and La Nina: which commodities they hit", https://commodityorigins.com/learn/el-nino-la-nina/ (CC BY 4.0).