Apr 27 / Laleska Moda

El Niño: new risk for the coffee market in 2026

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  • The chances of the development of an El Niño in the next months increased, with the NOAA point to a 60% chance of the phenomenon between May-July, while the IRI models indicate 70% of chance for the occurrence over April-June.

  • Models also indicate the continuation of the event through the rest of 2026 and early 2027, with potential risks for agricultural commodities, especially with the possibility of record temperatures throughout the year.

  • For coffee, an El Niño could pose a potential challenge for the 26/27 crop developments in regions such as Central and South America, Southeast Asia, and East Africa. On the other hand, it could reduce the chance of frosts during the Brazilian winter, as the event tends to raise temperatures.

  • The event could also bring risks to the 27/28 season in Brazil, as it may increase temperatures during flowering and bean development, as well as impact the rain pattern. If extended until mid-2027, and El Niño could also impact other origins 27/28 crop development.

El Niño: new risk for the coffee market in 2026

Agricultural commodity markets could face new challenges this year with the emergence of an El Niño event. The weather phenomenon– characterized by above average sea surface temperature (SST) in the Pacific Ocean – could already be in effect during the first half of 2026. NOAA pointing to a 60% chance of the phenomenon between May-July, while the IRI models indicate 70% chance for the occurrence over April-June and for 88% chance in the May-July quarter. The chances increase markedly for a rapid intensification in the second half of the year and, if confirmed, agricultural commodities could face heightened weather-related risks.

Looking more closely at SST anomaly forecasts for the Niño 3.4 region (central and eastern tropical Pacific), model averages suggest a sharp increase in temperatures later in the year, reaching above 1.5°C between October and November of 2026, which could indicate a stronger event than initially anticipated. For official confirmation, SSTs in the Niño 3.4 region must remain at +0.5°C (+0.9°F) or above for several consecutive overlapping three month periods, with events peaking above 1.5 °C considered more intense episodes. Recent NOAA guidance suggests nearly balanced probabilities among moderate, strong, and very strong El Niño scenarios from late 2026 onward.

Official IRI ENSO Probabilities (April 2026, %)

Source: International Research Institute for Climate and Society



An active El Niño persisting into early 2027 could bring record temperatures as well as droughts or floods across multiple regions, increasing risks to agricultural production. For coffee, it could pose a potential challenge for the 26/27 crop development in key producing areas such as Central and South America, Southeast Asia, and East Africa. It is also worth mentioning that the coffee tree is more sensitive to higher temperatures, as prolonged heat periods can harm plant development.  

IRI: Forecasted Sea Surface Temperature Anomalies (in ºC) in the Niño 3.4 Region

Source: Source: International Research Institute for Climate and Society

In Central America, El Niño typically leads to higher average temperatures and below-average rainfall, especially during July-August, when coffee cherries are still developing for the 26/27 season. The event affects mainly Guatemala, Honduras, and El Salvador. During the second semester, El Niño can also trigger higher temperatures and disruptions to rainfall patterns in Colombia, potentially impacting the 26/27 main crop, while a stronger or prolonged event into early 2027 could weigh on the mitaca crop as well.

In East Africa, El Niño generally brings rising temperatures but has uneven effects on rainfall, depending on the country and time of year. In Ethiopia, the phenomenon can suppress rainfall during June-September but later bring excessive precipitation and flooding, which may disrupt the 26/27 harvest. In Uganda, El Niño is often associated with above average rainfall, raising the risk of severe floods and landslides that could interfere with harvesting activities.


Possibles impacts of an El Niño in Coffee Producing Countries 

Source: Hedgepoint

An El Niño can also cause drier and warmer conditions in Southeast Asia and India, increasing the risk of heatwaves and drought, particularly in Indonesia, with some spillover effects in Vietnam. India could face a weaker and hotter monsoon season, which could impact the 26/27 cycle. In Indonesia, while the 26/27 season may be less affected as the harvest is just starting, risks increase for the development of the 27/28 crop. In Vietnam, El Niño may influence Pacific storm patterns in the coming months, potentially affecting the 26/27 season, but the main risks also lie further ahead, especially if the event extends into early 2027. Beyond higher temperatures, a longer and more intense dry season could delay early year rains and reduce water reservoir levels.

Finally, in Brazil, an active El Niño in the coming months could initially reduce weather risks during the winter of 2026, but it may also pose challenges later in the year during the development of the 27/28 crop. In particular, there is an increased risk of heatwaves during the flowering period. Although El Niño is less directly correlated with rainfall patterns in Brazil’s main coffee regions than in other parts of the country, it could still delay the onset of spring rains and negatively affect the 27/28 cycle.

Therefore, while the expected record Brazilian crop in 26/27 is likely to pressure prices in the short term, potential El Niño impacts could limit deeper market corrections later in the year, especially if adverse weather disrupts the 27/28 Brazilian flowering period.

In Summary

Agricultural commodities may face renewed weather-related risks as El Niño conditions are increasingly likely to emerge and intensify through the year. Forecasts point to a rapid warming of Pacific sea surface temperatures, suggesting the potential for a moderate to strong event later in the year and into early next year. If confirmed, El Niño could drive higher global temperatures and more frequent droughts or floods, raising production risks across several crop regions. For coffee, this would increase vulnerability in key origins across the Americas, Southeast Asia, and East Africa, particularly as the phenomenon strengthens into the second half of the year.

Regionally, El Niño typically brings hotter and drier conditions to Central America and parts of South America, disrupting coffee development during sensitive phases and potentially impairing both main and secondary crops. In East Africa, impacts vary by country, with shifts between drought and excessive rainfall raising risks of yield losses and harvest disruptions. Southeast Asia could face prolonged heat and dryness, heightening stress on future crop cycles, while Brazil may see mixed effects: reduced winter risks in the near term but higher exposure to heat stress and delayed rains during the next flowering period. As a result, while strong near-term Brazilian supply may pressure prices, weather uncertainty linked to El Niño could limit deeper market corrections later in the year.

Weekly Report — Coffee

Written by Laleska Moda

laleska.moda@hedgepointglobal.com

Reviewed by Carolina França
carolina.franca@hedgepointglobal.com
www.hedgepointglobal.com

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