JPMorgan Provides a "Timetable": The Biggest Impact of "El Nio" on Global Agriculture Will Be in "the First Quarter of Next Year"

Global food supply chain risks are accelerating. JPMorgan analysts have warned that the strengthening El Nio phenomenon is combining with global diesel and fertilizer shortages, and the biggest impact on agricultural production is expected to emerge in the first quarter of 2027. On September 18, Tracey Allen, head of agricultural commodities at JPMorgan, pointed out in a research report that the impact of El Nio on agricultural production is still in its early stages, but is expected to intensify noticeably early next year. Citing forecasts from the U.S. National Oceanic and Atmospheric Administration, he said El Nio will peak around November and has a 90% probability of developing into a "super strong El Nio" spanning autumn and winter in the Northern Hemisphere. Currently, the Bloomberg Agriculture Spot Index has risen to a 2023 high, and market expectations for a tightening food supply chain next year continue to heat up. Although relatively ample carryover stocks from the previous quarter have to some extent buffered the recent impact on physical grain markets, multiple risks are fermenting simultaneously. From historically high diesel prices, geopolitical disruptions to trade flows, and fertilizer shortages to drought in Europe and a U.S. spring planting season that fell short of expectations, the challenges facing agricultural markets are already comprehensive. In the introduction to his research report, Tracey Allen said bluntly: agriculture has 99 problems, and El Nio is just one of them. Production-area risks spread, threatening multiple crops The report detailed the climate pressures facing major global agricultural production regions. In Southeast Asia, palm oil planting areas in Indonesia are experiencing persistent drought along with spreading wildfires, threatening output; drought across Southeast Asia has also raised market concerns about robusta coffee, cocoa, and Thailand's sugarcane harvest. In India, southwest monsoon rainfall is about 15% below the long-term average. Although a decline in sugarcane ethanol output has somewhat eased the pressure on sugar supply from lower sugarcane production, rice, cotton, and oilseed production are facing new upside risks. South America is also not optimistic. Brazil faces a combination of drought and flooding: drought in the north threatens cocoa-producing areas, dry conditions in the center are putting pressure on soybean and second-crop corn belts, while excessive rainfall in the south-central region is delaying sugarcane harvesting and may reduce final sugar output. Northern Argentina is affected by excessively wet weather, hindering soybean planting. Shenzhen Agricultural Power Group under pressure on market technicals Jason Hunter, head of technical strategy at JPMorgan, noted that the agriculture sub-index of the JPMorgan Commodity Composite Index rose to a multi-year high in August this year. He also cautioned that if a relatively large pullback occurs, previous breakout levels will turn into new support levels, meaning the technical structure of the market's bullish setup has not yet changed. Since this summer, Wall Street has intensively published a number of warning reports about the risks to next year's food supply chain caused by the combination of El Nio and the energy crisis, and the wording of the related warnings is becoming more severe month by month. JPMorgan's explicit timetable this time gives this already brewing supply-side shock a clearer quantitative coordinate. This article is reprinted from "Wall Street See", author: Bao Yilong; GMTEight editor: Yan Wencai.