El Niño may benefit some South American soybean, corn, and wheat crops, but raises risks for Brazil’s Center-North

El Niño is once again on the radar of global agricultural markets. Although it is a recurring climate phenomenon, its impacts vary depending on its intensity, duration, and the time of year it occurs, making the monitoring of weather conditions an essential tool for producers, exporters, industries, and other participants in commodity supply chains.

The most recent projections indicate the possibility of an active El Niño in the coming months, with the potential to extend into the Southern Hemisphere summer. Climate models currently point to a moderate-intensity event, but one that may gain strength over time, influencing temperature and precipitation patterns in key producing regions around the world.

Given this scenario, understanding how the phenomenon may affect different crops and markets is essential for decision-making. From grains such as soybeans, corn, and wheat to tropical commodities such as coffee, sugar, cocoa, and palm oil, the effects of El Niño can alter production outlooks, global availability, and, consequently, price dynamics. In this article, we analyze the key points of attention for each market and the regions that should remain in focus for market participants over the coming months.

The confirmation of a new El Niño cycle for the second half of 2026 puts weather back at the center of attention for agricultural markets. According to an analysis by Hedgepoint Global Markets, the main impacts on soybeans, corn, and wheat are expected to be concentrated in South America, with varying effects across producing regions.

Historically, moderate to strong El Niño episodes that begin in the second half of the year tend to generate relevant agricultural impacts between the end of that same year and the first half of the following year, especially in the Southern Hemisphere. These periods coincide with the planting, development, and harvest of soybeans and corn in South America’s main producing countries.

In the southern half of South America, the phenomenon is characterized by increased rainfall during spring and summer, which is usually beneficial for soybean and corn crop development in southern Brazil, Paraguay, Uruguay, and Argentina. On the other hand, the northern half of South America may face below-average rainfall, especially in Brazil’s North and Northeast regions and parts of the Center-West.

Southern South America may benefit from the phenomenon

According to Hedgepoint, increased rainfall during spring and summer usually favors soybean and corn crop development in southern Brazil, Paraguay, Uruguay, and Argentina. In some previous episodes, El Niño conditions resulted in high yields and production in these regions, especially in southern Brazil and Argentina, as seen in the 2018/19 season.

In this context, it is worth highlighting the importance of soybean production in the Brazilian states of Paraná and Rio Grande do Sul, which, in years with favorable weather, often rank as Brazil’s second- and third-largest producing states, respectively. In addition, Rio Grande do Sul is Brazil’s largest summer corn producer.

Brazil’s Center-North concentrates the main risks

While parts of South America tend to benefit from more regular rainfall, the same is not true for the northern half of the continent. The phenomenon usually brings below-average rainfall during spring and summer, especially in Brazil’s North and Northeast regions and parts of the Center-West.

Given this scenario, El Niño poses production risks for major soybean-producing states in Brazil, such as Mato Grosso, Goiás, and Bahia, with some previous episodes pointing to significant production losses. One of the most recent examples was the 2023/24 season, when low moisture caused significant losses for the Brazilian crop, especially due to problems recorded in Mato Grosso, the country’s largest producing state.

Due to the opposite effects in the southern and northern halves of South America—with possible productivity gains in the south and reductions in the north—the El Niño phenomenon should not necessarily be associated with widespread losses across the continent as a whole. Even so, the relevance of production in Brazil’s Center-North states may carry greater weight in the overall outcome of Brazil’s soybean and corn crops.

Impacts may extend to second-crop corn

For corn, in addition to possible impacts on the summer crop, the initial effects on the winter crop—Brazil’s second crop—stem from potential delays in soybean planting caused by low moisture. These delays may shift second-crop planting into the first quarter of the following year.

This movement increases risks for second-crop corn, as it raises the possibility that the cereal’s development period will coincide with periods of lower moisture throughout the second quarter, during fall and winter.

Argentine wheat may also benefit

In addition to soybeans and corn, Argentine wheat is among the crops that have historically tended to respond positively to El Niño events.

Argentina is among the countries that traditionally benefit from the phenomenon, as increased rainfall frequency and regularity during the crop cycle tend to improve establishment, development, and grain-filling conditions, raising yield potential.

After periods of drought associated with climate neutrality or La Niña, El Niño usually enables a significant recovery in Argentine production and exportable surplus. As a result, in El Niño years, Argentina commonly expands its participation in international trade, especially in South American and North African markets.

The market turns its attention to Brazil and Argentina

When it comes to the Northern Hemisphere, El Niño does not usually generate relevant impacts on soybean and corn production, as there is no history of major changes in rainfall or temperature patterns in large producing countries. As a result, El Niño years direct the attention of soybean and corn markets toward Southern Hemisphere crops, especially in Brazil and Argentina.

For wheat, the effect on the global market depends on the balance between potential losses in Australia and gains observed in the Americas. In Latin America, Argentina stands out among the origins that may be favored by more regular rainfall during the crop cycle.

“The expected impacts of El Niño on soybean and corn crops are concentrated mainly in the Southern Hemisphere. The trend of above-average rainfall in spring/summer in the southern half of South America tends to be favorable for crops in southern Brazil, Argentina, Paraguay, and Uruguay. On the other hand, the trend of below-average rainfall in the northern half of South America may create problems for planting and crop development in Brazil’s Center-North, including Brazil’s second corn crop,” says Luiz Fernando Gutierrez Roque, Market Intelligence Coordinator at Hedgepoint.

Want to understand how El Niño could impact major global agricultural markets in the coming months?

Download the El Niño white paper from Hedgepoint Global Markets and gain access to a comprehensive analysis of commodities such as soybeans, corn, wheat, palm oil, cocoa, sugar, and coffee.

The study brings together climate assessments, production outlooks, and the key factors that may influence market prices and volatility, helping companies prepare for a scenario of greater uncertainty.