The El Niño weather phenomenon will exacerbate the effects of India’s rice export ban and Russia’s withdrawal from the Black Sea grain deal, according to the Financial Times. Expected to start in September, El Niño will bring extreme heat to parts of South Asia and Central America, as well as heavy rainfall to the Andes. This event typically disrupts crop cycles, adding strain to food output and prices, especially after India halted non-basmati white rice exports and Russia affected Ukrainian grain terminals.
These three shocks could lead to higher inflation expectations in emerging markets, where food constitutes a larger portion of consumer spending compared to developed economies. As a result, central banks in these countries might need to maintain higher interest rates for longer, potentially leading to market volatility. The moves by India and Russia are already affecting global food prices, as seen in the United Nations’ FAO food price index. In Europe, a colder winter caused by El Niño could lead to increased demand for liquefied natural gas. Read more from Pro Farmer.
