Arxius de Research - Page 2 of 22

The WMO (World Meteorological Organisation) raised to 90% the probability that the phenomenon known as El Niño will remain active until the end of 2026, while NOAA (the National Oceanic and Atmospheric Administration) has given it a 96% probability of persistence until February 2027. What is relevant to the larger picture is not only the high probability of the event, but the context in which it occurs. It is good to analyse it alongside the pressure that was already being exerted by the shock to energy and fertilisers resulting from the conflict in the Middle East, and not as a single isolated factor. When it comes to this type of natural phenomena, El Niño and La Niña are the two opposing phases of the same natural climate cycle, known as ENSO, which repeats irregularly every 2 to 7 years and usually lasts between 9 and 12 months. El Niño occurs when the surface waters of the equatorial Pacific heat up above normal,which weakens the trade winds and typically brings more rain to the west coast of South America and droughts to Central America, South Asia, and southern Africa. La Niña is the process in reverse: a cooling of those same waters, and it generally inverts the pattern: more rain in South-east Asia and Australia, and drier conditions in much of South America. Neither is an exceptional event; they are part of normal global climate behaviour, although their intensity does vary considerably from one cycle to another. The phenomenon does not affect the entire region in equal measure, and this asymmetry should be borne in mind to properly size the analysis. In Peru, Ecuador and northern Chile, the main challenge is excessive rainfall, with the period of greatest intensity expected between the last quarter of 2026 and the first quarter of 2027, something that may affect the volume and quality of exported fruit and vegetables. In Mexico and Central America, the pattern reverses and they anticipate drier than usual conditions, given the region's proximity to the warm waters of the Pacific. Colombia, like the previous region, finds its hydroelectric generation affected, while in the South, Argentina contains the variable to follow most closely for the global agricultural market, given the weight of its corn and soy bean harvests in international prices. Following the closure of the Strait of Hormuz, the artery through which nearly 45% of the world’s fertiliser trade passes, we can find a great deal of price volatility. For example, urea, the world's most widely used nitrogen fertilizer, rose +53.7% in March, its highest level since 2022, and the World Bank's overall fertilizer index increased by26.2%. Since fertiliser represents between 15% and 30% of a crop’s total production cost, it is a variable that should be closely monitored, because how it evolves will affect the producer's margin. In inflation forecasts, the first thing that is usually taken into account are the consequences of geopolitical risks such as the closure of the Strait of Hormuz. In most cases, the price of oil is closely monitored, but other relevant variables often go unnoticed. Weather phenomena such as El Niño can also have an impact, as they are capable of placing additional pressure on food prices that are not fully reflected in today's market today. Date of report: July 8th of 2026

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