21st August 2026
There are some stories which begin with something happening thousands of miles away and eventually arrive at the supermarket checkout. El Niño could become one of them.
We hope the predctions are wrong but being prepared is the more prudent way forward.
For most people in Britain, the warming of tropical Pacific waters sounds like a distant weather story. It is anything but that.
The latest forecasts suggest that a potentially very strong El Niño is developing, and its effects are already being felt in one of the world's most important pieces of infrastructure: the Panama Canal.
And this time the concern is not simply whether ships can get through.
It is what happens if the same weather phenomenon begins affecting crops, food-producing regions and supply chains at the same time.
That is when a climate event becomes an economic event.
The Panama Canal has already become a warning signal for what may be to come. The Panama Canal depends upon freshwater.
Ships passing through the locks effectively require enormous quantities of water, supplied principally by the Gatún Lake system. When rainfall falls, the amount of water available for shipping falls too.
That is exactly what happened during the severe drought of 2023 and 2024, when the canal was forced to restrict traffic and impose limits on how much cargo some vessels could carry.
The canal eventually recovered as rainfall returned but now the problem is beginning again.
The Panama Canal Authority has announced that daily transits will be reduced from September, initially to 34 vessels a day and then to 32 from 15 September.
That is particularly significant because the authority had previously indicated that restrictions would not be necessary during 2026.
The situation has changed because the weather has changed. Rainfall between May and August has been running 34% below average, while water inflows into the canal's watershed are down by 44%. The canal is therefore becoming an early warning system for what El Niño could mean for the wider global economy.
The big question is why does El Niño do this? El Niño is a natural climate phenomenon caused by unusually warm sea-surface temperatures across parts of the tropical Pacific.
That sounds simple enough but the difficulty is that the Pacific Ocean is so enormous that changing its temperature alters atmospheric circulation and rainfall patterns thousands of miles away.
One part of the world can become much wetter while another can become much drier. Some agricultural regions experience drought and others can face flooding.
Temperatures can rise and storm patterns can change. And because modern food production and international trade are interconnected, the effects don't necessarily remain local.
That is why El Niño matters to Britain and the the food problem could be much bigger than the canal problem
The Panama Canal is perhaps the easiest part of the story to understand.
If fewer ships can pass through the canal, shipping companies have to make difficult decisions.
They can wait and they can carry less cargo or they can pay more for a transit slot. Or they can take a longer route around South America.
All of those options cost money.
The canal handles more than 3% of global maritime trade, making even relatively modest restrictions significant. But shipping disruption is only one part of the potential problem.
The much bigger issue is what happens to agriculture. Some farmers will face drought while others face too much rain
This is one of the strange characteristics of El Niño. It doesn't simply make the whole world drier. It rearranges the distribution of rainfall.
Current analysis is highlighting risks across a number of important agricultural regions. Australia and parts of Southeast Asia could face increased drought pressure, while parts of South America could experience excessive rainfall.
That matters because global food production depends upon a relatively small number of major exporting regions.
If one of those regions has a poor harvest, the rest of the world doesn't necessarily have an alternative sitting on a supermarket shelf.
The price mechanism steps in. When supply falls and demand remains broadly unchanged, prices rise and food markets can react before the harvest actually fails.
Traders don't wait until a field is destroyed.
They start pricing in the possibility that it might happen. Coffee, cocoa, sugar and palm oil could be particularly vulnerable
Some commodities are already being watched closely. El Niño can have significant effects on coffee-growing regions, cocoa production, palm oil and sugar.
Reuters reports that Southeast Asian coffee production is among the areas facing weather-related risks, while cocoa production in West Africa and corn production in Argentina are also vulnerable to changing conditions.
This matters because some of these products are already expensive.
Chocolate is an obvious example and coffee prices have also been volatile.
If weather problems reduce production at the same time as transport becomes more expensive, the pressure can be amplified.
It becomes a double hit with less product and a higher cost of getting the product to market.
And 2027 could be the year when consumers notice and this is where the timing becomes important.
The strongest effects of El Niño don't necessarily appear immediately.
Agriculture operates according to planting and harvesting cycles. A weather disturbance today can affect a crop months later.
That means the consequences of a developing El Niño in the second half of 2026 could increasingly show up in 2027 harvests and food prices.
Some commodity analysts are already warning that drought risks in Southeast Asia could threaten rice and palm oil production through 2026 and 2027.
That doesn't mean food prices are destined to explode.
It means the risks are beginning to line up. The world is not starting from a position of strength.
This is perhaps the most worrying part. The global food system has already been through several shocks.
The war in Ukraine disrupted grain and fertiliser markets.
Energy prices have been volatile. Shipping routes have been disrupted by conflict.
The Strait of Hormuz crisis has added another layer of uncertainty to fuel and fertiliser costs.
And now El Niño is potentially adding a weather shock to the equation.
Each individual problem might be manageable but the danger comes when they occur together.
A farmer needs fertiliser. Fertiliser requires energy.
The farm needs fuel. The crop needs water.
The harvested crop needs transporting. The transport system needs fuel.
And the final product needs to reach consumers.
A disruption at several points simultaneously can produce a much bigger economic effect than any individual problem.
This is why the Panama Canal matters to Britain and it would be easy to assume that a drought in Panama is somebody else's problem. It isn't.
Britain is a trading nation.
We import enormous quantities of food, ingredients, manufactured goods and raw materials.
Even when the food itself doesn't pass through the Panama Canal, the broader shipping market is interconnected.
If one major route becomes more expensive or congested, ships and cargoes are moved elsewhere.
That puts pressure on alternative routes.
Shipping companies have to reposition vessels.
Fuel consumption increases when ships take longer routes.
Insurance costs can rise and freight rates can increase.
Eventually, those costs have to be absorbed somewhere. Often they end up being passed down the supply chain.
And eventually the consumer sees them.
It could become another food inflation story as there is an important difference between food shortages and food inflation.
Britain is unlikely to suddenly run out of food because of El Niño.
That isn't the realistic concern. The much more likely scenario is that some products become more expensive.
A coffee company pays more for beans. A chocolate manufacturer pays more for cocoa.
A food producer pays more for ingredients. A retailer pays more for transportation. Each absorbs some of the increase and passes some of it on.
The consumer then sees another small increase on the shelf.
One product going up by 20p isn't a crisis.
But if dozens of commodities and supply-chain costs rise together, the cumulative effect becomes significant.
And there is a Scottish dimension. Scotland has an interesting relationship with this global food system.
We produce enormous quantities of food ourselves, particularly fish, meat, dairy and agricultural products.
But Scottish consumers also rely heavily on imported food and ingredients.
Our food supply chains stretch far beyond Scotland.
That means a global commodity shock can affect Scottish households even when Scottish farmers are having a good year.
There is another complication.
Scottish agriculture itself is increasingly exposed to weather extremes.
The past few years have demonstrated that weather is no longer something farmers can simply treat as background noise.
Too much rain at the wrong time can be as damaging as drought.
A dry spring can affect grass growth or a wet harvest can damage crops.
Higher fuel and fertiliser prices add another layer of pressure.
So Scotland can potentially experience both sides of the problem.
Global food prices rise while domestic producers are dealing with their own weather and cost pressures.
Could this become another cost-of-living shock?
That is the question worth watching. We shouldn't predict another food-price crisis simply because El Niño is developing.
There are too many variables.
A strong harvest somewhere else could offset a poor harvest.
Countries hold strategic food stocks. Farmers can change planting decisions. Consumers can change what they buy. Shipping companies can find alternative routes. And weather forecasts themselves can change.
There is also evidence that the global food system is better prepared for a severe El Niño than it was for some previous events, thanks to larger grain stocks and improvements in agricultural technology.
So this is a risk, not a prediction. But it is a risk worth taking seriously.
Previous very strong El Niño events produced enormous economic disruption.
The 1982–83 and 1997–98 events caused estimated global economic losses running into trillions of dollars, although those historical estimates should not be interpreted as forecasts for the current event.
The important lesson is that El Niño can become much more than a weather phenomenon.
It can affect agriculture, fishing, energy, transport, infrastructure and economic growth simultaneously.
And climate change adds another layer of complexity because the background climate is already warmer than it was during many historical El Niño events.
We should be watching 2027 now
Perhaps the most important message is that 2027 is already beginning to matter.
Governments and businesses cannot wait until supermarket prices start rising before thinking about food security.
Farmers need to know what weather conditions might be coming.
Food manufacturers need to consider alternative suppliers.
Shipping companies need to consider alternative routes.
Retailers need to understand which commodities are most exposed.
And households need to understand that another period of food-price pressure is possible even if inflation appears relatively calm today.
The extraordinary thing about the modern economy is how quickly something that begins with unusually warm water in the Pacific can eventually affect the price of something sitting on a kitchen table in Scotland.
The next global shock may not come from a war
That is perhaps the most uncomfortable conclusion.
We have become accustomed to thinking about economic shocks in terms of wars, financial crises and political decisions.
But climate can create its own shocks.
El Niño is not caused by governments.
It cannot be negotiated away.
It doesn't respect borders.
And nobody can tell it to wait until the global economy is in a better position to cope.
At the moment, the world is watching the Pacific.
It is watching the Panama Canal.
It is watching rainfall in agricultural regions.
And increasingly, commodity traders are watching the same weather maps.
For consumers, the most important question may eventually be a very simple one:
What happens to the price of food if the world gets less of it at exactly the moment that transporting it becomes more expensive?
We don't know the answer yet.
But with the Panama Canal already restricting traffic and forecasts pointing towards a potentially very strong El Niño extending into 2027, it would be foolish to ignore the possibility.
The next food shock may not arrive with a dramatic announcement.
It could arrive quietly — one failed harvest, one shipping delay and one price increase at a time.