El Niño conditions have officially materialised in the tropical Pacific, marking the arrival of the weather phenomenon that is forecast by many agencies to develop into a “Super” El Niño over the coming months. Commentary on the event has pointed to widespread, catastrophic disruptions to global agricultural supply, but an analysis of historical data suggests a more localised reality.
For global fertilizer market participants, El Niño is not a global demand destruction concern. Instead, it changes when and where farmers will buy fertilizer, causing suppliers to focus on where they position their tonnes. Impacts will vary as regional crops and cycles differ across the world, leading to mixed regional fertilizer consumption trends across crops. It is important to note that El Niño redistributes heat and moisture across the globe, changing the likelihood of certain weather patterns rather than guaranteeing them. As a result, its impacts are not uniform and can differ significantly from one event to the next.
This insight is the first of a series of three that will cover agricultural impacts in Asia, EMEA and the Americas. Each insight will cover El Niño’s impact on the region in focus, including the most at-risk crops and what kind of disruptions clients can expect during the current event. This series also forms part of a broader set of El Niño-related insights from CRU, which currently covers steel market disruptions and the global economy.
El Niño is strengthening, but a downstream buffer could lessen regional impact
El Niño cycles differ in strength and impact. While stronger events are more likely to bring about weather changes, this is not guaranteed. Right now, the National Oceanic and Atmospheric Administration’s (NOAA) data shows a 63% chance that this event develops into a “Super” El Niño by winter, with temperature anomalies crossing the +2.0°C threshold. While the current trajectory of the event ties closely to those of 1997–1998 and 2015–2016, two key metrics indicate that the current event could wind up milder than expected.
The main metric used to assess the event’s disruption is the NOAA’s Relative Oceanic Niño Index (RONI), which removes general global warming trends to compare the central Pacific to other global tropics. RONI currently sits at 0.5°C – the minimum threshold for an El Niño – meaning there is no disruption yet as the phenomenon is just beginning to build. For reference, the last “Super” El Niño occurred in 2015, and the RONI had already begun rising earlier in the spring and was 0.8°C at this point in the year. It is worth noting that the current event’s RONI did go from 0°C in June to +0.5°C in July. The next RONI update will be released in the first week of August.
The Pacific Decadal Oscillation (PDO) focuses on broader Pacific temperatures, complimenting El Niño’s equatorial focus. The PDO is current strongly negative, meaning there is unusually cool water in the North Pacific that will help to absorb some of the heat being pushed downstream, which will help mitigate some of the risk from El Niño.
Ultimately, the negative PDO is buffering the downstream impact, while the low RONI proves that this event still has a long way to go before it becomes a major problem for agriculture and fertilizer volumes.
As displayed in the NOAA map above, El Niño’s impact is highly asymmetric. The Americas tend to see a highly mixed impact, with Argentina and the US seeing beneficial rains while Brazil experiences drought in the north and heavy rains to the south. Asia and Eastern Australia face a far more certain threat of widespread heat and dryness. Given the geographic concentration of El Niño, certain crops face disproportionate exposure.
Evaluating crop vulnerability and impact
For Asia, the most impacted crops will be rice in South and Southeast Asia, along with palm oil in the latter, and finally Australian wheat.
Asian rice
Rice is the single most vulnerable crop due to its intense water usage and geographic concentration, with 90% of global production in Asia. In June 2026, India’s southwest monsoon opened with a 40% rainfall deficit, which has already dragged summer rice planting down by 25%, while hot weather and delayed rains in Southeast Asia are actively hindering planting across the region. With El Niño reaching its maximum intensity during the Northern Hemisphere winter, it directly intersects rice planting and development cycles in South and Southeast Asia.
Using yield data from the United Nations Food and Agriculture Organization (FAO) we can see the regional impacts on rice yields during periods where El Niño is present.
Reviewing the data, we can see that while the averages below can guide us in terms of some expectations, the range of outcomes have varied considerably for El Niño events. The very strong, nearly “Super” event in 1965–1966 resulted in a 3.2% reduction in global rice yields, with South Asia bearing the brunt of the impact as its yield dropped nearly 15%, which when compared to a decline of just under 1% for Southeast Asia shows the inconsistent direction even in the same event.
The last “Super” El Niño in 2015–2016 saw positive impacts early on before a nearly 3% decline in Southeast Asia dropped global yields marginally. South Asia saw yields rise both years, with 2016 seeing a strong increase due to a recovery in late-season monsoons. The most recent event in 2023–2024 was strong to very strong, with rather muted impacts as yields rose in 2023 before marginal declines were seen in 2024.
Using NOAA intensity thresholds, the below analysis compares stronger El Niño events (ONI ≥ +1.5°C) to more typical events (+0.5°C ≤ ONI ≤ +1.5°C). The onset and following year for each event were stripped apart to compare immediate and lagged impacts.
Comparing historical yield data suggests that downside risks from El Niño are not uniform, with stronger events showing greater initial disruption in South Asia, while yields elsewhere have generally remained resilient. Suppliers are not facing a case of widespread demand destruction but rather a redistribution of demand. Additionally, conditions tend to improve in the year following, bringing continue growth and in South Asia’s case, a much-welcomed recovery.
From crop to fertilizer, we know nitrogen is the key nutrient for rice, typically applied in split applications throughout the growing cycle to support growth and grain development. Phosphate and potash are generally applied earlier in the season, supporting root establishment and resilience.
From an affordability standpoint, nitrogen has improved significantly from its worst level on record in April 2026 but remains elevated over its historical average. Meanwhile, phosphate is still historically unaffordable with not much relief in sight, and potash is the most affordable of the three by far as it sits comfortably below its historic average.
Rice requires heavy nitrogen and phosphate application during the initial wet sowing window. Delayed planting schedules will not destroy demand, but they will cause inventories to accumulate as application windows shrink.
Southeast Asian palm oil
Highly concentrated between Indonesia and Malaysia, palm oil production also faces high risk from the current El Niño. Palm is a permanent tree crop that differs significantly from annual grain crops as palms take three to four years to begin producing harvestable, fresh fruit bunches and enter their production lifecycle. FAO palm oil production for Indonesia, Malaysia, and the rest of Southeast Asia points toward reduced output in the second calendar year of El Niño.
During the 1982 onset, production rose significantly for Indonesia and Malaysia. However, the following year, Malaysia saw a decline of 14% while Indonesia saw its production rise 11%. The 1997–1998 event mirrored the pattern from 1982-83, with first-year increases and subsequent declines roughly half those of the previous event. Indonesia saw consistent growth once again, recording 10% growth each year.
The “Super” El Niño in 2015–2016 was also consistent with the above pattern as Malaysia saw minor growth in 2015 before a sizable decline in 2016, and Indonesia once again saw growth in both years. The milder 1965–1966 event brought a 4% decline to Indonesia in the first year before rebounding well beyond its prior baseline, while Malaysia saw growth of over 20% for each year.
Production growth was seen across the board in 1972–1973, with Malaysia seeing significantly higher growth than Indonesia. The 2009–2010 event was slightly different as Malaysia was the one to see minor growth declines each year, while double-digit growth was realised each year in Indonesia.
Palm plantations use a lot of potash and blended fertilizers for their lucrative cash crop. The risk for fertilizer suppliers will not be immediate, but rather in the following year when crop yields dip. Grower will see compressed cash flows that cause them to tighten their fertilizer budgets.
Australian wheat
In Australia, the winter wheat crop is exceptionally sensitive to rainfall deficits as extreme heal depletes soil moisture, which hinders grain filling and caps yields. Historical FAO data points toward volatile, immediate production declines during strong El Niño cycles. Total production and yield have declined significantly in the past, with both metrics seeing declines of over 40% during prior El Niño events. Growers will be forced to adjust rapidly by scaling back or cutting nitrogen top dress.
Yield regression is likely, though application rates are set to remain resilient
Ultimately, historical data proves that El Niño is a manageable, localised risk rather than a global agricultural disaster. While responses varied across crops, nutrients and event intensity, fertilizer application rates generally remained resilient during both the onset and peak phases of historical El Niño events.
In several cases, positive responses persisted or strengthened in the year following the onset, suggesting nutrient use has historically been maintained beyond the initial emergence of El Niño conditions. Overall, the analysis does not indicate a widespread reduction in fertilizer application following the onset of El Niño, with nutrient demand generally proving more resilient than commonly assumed.
