“Godzilla” El Niño Threatens to Become the Next Inflation Headache
“The Little Kid” doesn’t sound like much of a threat... until it’s translated. Just as investors banked on the Iran conflict winding down to cool energy prices, El Niño may have other plans. Forecasters are calling this summer’s Pacific event “supercharged,” while T. Rowe Price claims the US economy is “positioned perfectly for an inflation storm.”
- NOAA gives El Niño 90%+ odds this year, including a 25% chance of an unusually powerful event — with Marex identifying wheat, rice, cocoa, sugar, cotton, and palm oil as the most exposed.
- Unlike shocks that hit one crop at a time, El Niño triggers cross-continental harvest failures — potentially yielding 10%-100% price hikes amid export bans.
The other side: While El Niño’s damage is distributed, the beneficiaries are concentrated. That means fertilizer producers and equipment manufacturers like Nutrien, Mosaic, and Deere gain when squeezed yields push farmers to maximize returns per hectare. For inflation protection beyond agriculture, the Harbor Commodity All-Weather ETF, Franco-Nevada, and Wheaton Precious Metals offer exposure across the full spectrum of commodities. With NOAA forecasting persistence into early 2027, “The Little Kid” has a long growing season ahead.
