Published: · Severity: WARNING · Category: Breaking

Ecuador warns El Niño may mirror 1997–98, 2023–24 events

Severity: WARNING
Detected: 2026-08-13T14:28:26.337Z

Summary

Ecuador’s ERFEN committee reports Pacific thermal patterns resembling the severe 1997–98 and 2023–24 El Niño events, with final impact contingent on atmospheric coupling. This raises the risk of major weather‑driven disruptions to Andean/Latin American agriculture and infrastructure, adding upside risk to softs and some grains via supply and logistics shocks.

Details

Ecuador’s National ERFEN Committee has flagged that current Pacific Ocean temperature configurations resemble those seen in the strong El Niño episodes of 1997–98 and 2023–24. While it stresses that the ultimate severity depends on whether the atmosphere fully couples to these ocean anomalies, the signal coming this early sharply increases the probability of another disruptive El Niño phase affecting the eastern Pacific rim and Andean economies.

From a supply‑side perspective, strong El Niño conditions in this region historically bring intense rainfall and flooding to Ecuador and parts of Peru while inducing drought or erratic rainfall elsewhere in Latin America and beyond. For Ecuador and adjacent areas, this tends to disrupt transport infrastructure (ports, roads, rail), impede harvests, and damage cropland—especially for bananas, cocoa, coffee, sugar, and some grains. In Peru and Bolivia, impacts can spill into coffee and other highland crops. Even if global grain volumes are less directly affected than in key North American or Black Sea breadbaskets, logistics bottlenecks and port closures can constrain export flows and tighten regional supply.

The immediate market implication is a weather‑risk premium building across soft commodities: ICE arabica and robusta coffee, ICE sugar, cocoa, and to a lesser extent palm oil (via broader tropical weather shifts) and some Latin American corn/soy flows. Freight and local fuel demand may also be affected by emergency and reconstruction activity, but the dominant tradable signal is on softs and select grains. Historically, the 1997–98 El Niño coincided with significant price spikes in coffee, cocoa, and some grains due to weather disruptions, while 2023–24 saw persistent strength in cocoa and robusta coffee on supply stress.

This development is structurally important because climate‑driven shocks are multi‑month. If atmospheric coupling confirms in coming weeks, the price impact could extend through the 2026–27 crop cycles, with periodic repricing as damage assessments firm up. For now, markets are likely to price in an incremental weather premium rather than a full‑blown catastrophe scenario, but the skew in risk is clearly to the upside for softs and for insurance and infrastructure‑exposed equities in the region.

AFFECTED ASSETS: arabica coffee futures, robusta coffee futures, cocoa futures, sugar No.11 futures, corn futures, soybean futures, Ecuador sovereign bonds, Peruvian sol, freight rates Pacific Latin America

Sources

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