An emerging El Niño weather pattern could alter global cargo flows and add volatility to freight markets, with potential implications for coal demand, agricultural trade and supply chains.
The World Meteorological Organization (WMO) has placed the probability of an El Niño event developing between June and August at 80%, with a high likelihood that conditions could persist through the remainder of the year.
The most immediate freight impact is likely to be felt in Asian coal markets, according to Greek shipbroker Intermodal. The broker said hotter and drier conditions could increase electricity demand across parts of Asia, particularly India, extending reliance on coal-fired power generation and supporting seaborne coal imports.
"El Niño is again becoming a factor for 2026, and its freight impact is likely to be felt mainly through Asian power demand, crop risk and trade-flow shifts," Intermodal said in a recent market report.
Agricultural trade could also be affected as changing weather patterns alter production levels in key exporting regions, the broker said. El Niño is typically associated with reduced rainfall in South Africa, Australia, Indonesia and parts of South Asia, while bringing wetter conditions to parts of South America.
Industry forecasts cited by Intermodal point to a 19% decline in Australian wheat production to 29 million tonnes in the 2026-27 season, with exports expected to fall by 2.5 million tonnes to 23.5 million tonnes. The broker said lower Australian export volumes could reshape grain trade routes and tonne-mile demand.
A potential 2026-27 El Niño event should be viewed as a systemic risk rather than simply a weather phenomenon, the World Economic Forum (WEF) has warned. Reporting on the WEF assessment, S&P Global Commodity Insights said the organisation believed the event could have far-reaching consequences for commodity markets, transport networks and global trade.
The WEF also warned that droughts, floods and extreme heat could disrupt logistics networks by lowering river levels, damaging roads, ports and other transport infrastructure, and reducing labour productivity across sectors. Agriculture-related supply chains were identified as particularly vulnerable because climate risks are increasing while energy and input costs remain elevated.
Shipping markets were closely monitoring developments because changes in commodity demand and trade patterns could influence vessel demand and freight rates well into 2027, Intermodal said. According to the broker El Niño was likely to be more supportive of coal freight demand than grain freight demand in the near term.
