El Niño is a climate pattern characterized by above-average sea surface temperatures in the central and eastern Pacific Ocean, which disrupts typical atmospheric circulation and alters global weather patterns.

Under normal conditions, trade winds push warm water from the western coast of South America toward Asia. During El Niño episodes, these winds weaken or reverse, allowing warmer waters to accumulate along the western coast of the Americas and cooler waters across Southeast Asia. 

A “Super” El Niño simply refers to a more intense and often more persistent version of this pattern with sea surface temperatures exceeding 2.0 Celsius¹, increasing the likelihood of extreme weather events such as droughts and floods.

La Niña represents the opposite phase of this cycle, with stronger trade winds leading to cooler Pacific waters near the Americas and different regional weather patterns.

Together, El Niño and La Niña are part of the El Niño–Southern Oscillation (ENSO), a recurring climate cycle that typically occurs every two to seven years and lasts roughly 9 to 12 months, although both timing and intensity can vary.

The impact of ENSO events on commodities is highly region-specific, with production outcomes varying depending on local weather conditions. However, key agricultural commodities—including corn, wheat, soybeans, coffee, and sugar—tend to be particularly sensitive to these shifts.

While each event is unique, historical patterns suggest broad tendencies across markets. El Niño conditions have generally supported soybean production while weighing on corn and wheat production, whereas La Niña has more often created widespread pressure across major crops.

Source: United States Department of Agriculture, Quick Stats Database. Data as of June 11, 2026.

Agricultural commodity prices are very sensitive to evolving expectations around the timing, probability, and intensity of a potential El Niño event.

According to the U.S. National Oceanic and Atmospheric Administration (NOAA), as of June 17, 2026, there is currently a high likelihood of El Niño conditions developing, with probabilities approaching:

• ~97% by early summer
• Near 100% by late summer to early fall
• A 63% chance of a "Super" El Niño

The transition from a multi-year La Niña to a potential "Super" El Niño reinforces a broader theme: increasing uncertainty in supply-driven markets. Weather-related shocks are inherently difficult to predict, but their effects on commodity prices—and, by extension, inflation—can be meaningful. Several implications stand out for investors:

Greater inflation variability – Weather disruptions can create supply disruptions that can feed directly into food and commodity prices, contributing to more volatile inflation outcomes.

Upside potential in commodities – Agricultural markets often react quickly to production shortfalls, creating upward pricing pressure during periods of supply uncertainty.

Diversification benefits – Commodities have historically shown sensitivity to supply-driven shocks, providing diversification relative to traditional equities and fixed income.

From a TD Asset Management Inc. (TDAM) portfolio construction perspective, this environment continues to support a strategic allocation to commodities. As macroeconomic conditions become more uncertain, real assets, particularly those with sensitivity to supply dynamics, are playing an increasingly important role in managing inflation risk and enhancing diversification.

Source: National Oceanic and Atmospheric Administration, Food and Agriculture Organization of the United Nations

¹ National Oceanic and Atmospheric Administration, U.S. Department of Commerce, June 11, 2026.