The likely return of La Niña could impact global agricultural production in 2026
The ENSO phenomenon entered a La Niña phase in October. Forecasts from the World Meteorological Organization (WMO) and Columbia University suggest a return of La Niña in Q4 2025, with visible effects starting in early 2026.
If confirmed, our scenario would imply positive effects on agricultural production in Asia, with stronger monsoon activity expected in 2026, while South and North America, and Southern Africa could face adverse impacts. La Niña is also likely to bring colder-than-average conditions to parts of the northern hemisphere during the 2025–2026 winter season – notably in Canada, northern US, China, Japan and the Korean Peninsula – potentially driving up heating-related energy consumption. Last, the risk of localised extreme weather events may increase, particularly the likelihood of hurricanes in the Gulf of Mexico.
Global cereal surplus eradicates recent supply uncertainty
According to FAO forecasts, global cereal production is expected to grow by 2% year-on-year (y/y) in 2025 (following zero growth in 2024) to reach 2,911 million tonnes this year, thereby surpassing the previous record set in 2023 (2,856 million tonnes). As demand remains stable (2,733 Mt, +0.5%), supply is expected to be in surplus over the coming year. Wheat, maize and rice production will contribute positively, driven by expansion in cultivated areas and particularly favourable yield forecasts. Regional distinctions are expected to be significant. Europe is likely to experience a mixed situation, with improved wheat harvests but weaker maize production prospects. Latin America and Asia will be key regions driving the increase in cereal supply, notably due to rising maize and soybean production. In contrast, North America faces more uncertainty, with a slight decline in wheat output expected, particularly in the US.
After posting a sharp decline in 2024, the European Union’s (EU) cereal production is expected to rebound in 2025, thanks to favourable rainfall and sowing conditions in France, Spain and Italy during the first half of the year. However, above-average summer temperatures in these same countries could negatively impact maize yields. The EU’s introduction of customs barriers on Russian and Belarusian fertiliser imports since 1 July may also affect European cereal producers’ supply chains and production costs.
Across the Atlantic, wheat production prospects are mixed. In Canada, output is expected to remain close to last year’s levels. In the US, however, wheat production is projected to decline slightly(3% y/y) due to persistent drought concerns. In contrast, secondary cereal crops (maize, soybeans) are expected to grow in the US, with the FAO estimating a 5% increase in sowing compared to 2024.
In Asia, hot and dry weather in India has prompted downward revisions to national production forecasts. However, according to the USDA, widespread irrigation has mitigated the impact, and 2025 is expected to be a record wheat harvest year. In the Middle East, geopolitical instability continues to pose risks. Potential disruptions to maritime traffic through the Strait of Hormuz could jeopardise fertiliser supplies for Asian countries in the 2026 season. Nations like India are particularly dependent on fertiliser imports from Gulf countries transiting through the strait.
In the southern hemisphere, the 2025 harvests of secondary cereal crops are under way. Overall, maize production exceeded last year’s levels and the five-year average. In Brazil, favourable price expectations have supported an estimated increase in planted areas, and generally good weather conditions should allow for modest yield improvements. In Argentina, maize production forecasts are up on back of favourable rainfall, although output is likely to remain below the five-year average. In South Africa, cereal harvests are expected to improve in 2025 due to favorable weather conditions, in the wake of a drought-affected 2024 season.
Supply deficit will continue to weigh on the non-cereal agricultural commodities market
Unlike cereals, other agricultural raw materials are suffering from production shortfalls – structurally in the case of cocoa and more sporadically for sugar. Any decline in output places pressure on the entire value chain, amid durably strong demand. The concentration of supply chains further increases the vulnerability of these markets. For instance, Côte d’Ivoire and Ghana together account for 60% of global cocoa production. However, Ghana’s output has dropped by nearly 50% since 2021, while production in Côte d’Ivoire has stagnated. In a mere two years, the slowdown has tripled international cocoa prices, which are now stabilising at levels four times higher than the 2015-2019 average. A similar trend has been observed in the coffee market, where prices have doubled over the past two years. Adverse weather conditions in West Africa (for cocoa) and Southeast Asia (for coffee), combined with structural yield declines and low producer incomes, have weighed heavily on production amid steadily rising demand.
In 2025, escalating trade tensions will undermine the global agri-food sector
Agri-food products are the linchpin of the trade war. The European Union currently appears to be the most exposed region given the significant share of agri-food in its exports. France, Spain and Italy are particularly vulnerable to a contraction in agri-food exports to the US and are directly affected by higher tariffs imposed by the Trump administration. Wine and brandy, dairy and confectionery segments appear to face the most risk. Instead of the tax imposed on European spirits (particularly cognac) in China since October 2024, these products have been subject to a mandatory minimum since July 2025 as a retaliatory measure against European tariffs on Chinese electric vehicles. China is the second-largest export market for French cognac, accounting for nearly 20% of exports, behind the US (40%). These two countries are critical for the sector given that 95% of French cognac production is exported.
The trade war could also hurt US cereal producers. Chinese retaliatory measures primarily target US agricultural products, with tariffs of 10% to 15%, including 10% on soybeans. China is the world’s largest soybean importer and the top export destination for US soybean. China already targeted US soybeans during Trump’s first term in 2018, causing exports to plummet by 75% from USD 12 billion in 2017 to USD 3 billion in 2018. A renewed contraction in Chinese imports would likely drive down US soybean prices. Without guaranteed access to alternative markets (e.g., the EU), US producers would suffer seriously from Trump’s tariff measures.
Moreover, parts of the US agricultural and agri-food industry are highly dependent on foreign labour. For example, 21% of the workforce in meat processing and 42% in crop production are undocumented migrants. These sectors could be severely impacted by a tightening of US immigration policy. In the short term, this would likely result in labour shortages and slower activity, leading to potential revenue losses for businesses. In the longer term, production costs are expected to rise, driven by higher wages for legal foreign workers and US citizens. In a context of slowing US economic growth – Coface forecasts 1.0% GDP growth in 2025 – companies in the sector will face the dual challenge of shrinking margins and softer demand.
Outlook for major agricultural commodities in 2025
Wheat – The latest FAO forecasts for wheat production in 2025 stand at 800 million tonnes, matching the previous year’s output (+0.3% y/y). Global demand is expected to remain stable in 2025. As a result, we anticipate wheat prices to remain relatively low, around 180 USD/t (-7% y/y).
Maize – Global maize production is expected to reach a record high in 2025, according to the FAO, with an estimated increase of 3.5% compared to 2024 to reach approximately 1.2 billion tonnes. Growth is mainly being driven by improved yields in Brazil and India, where domestic demand for animal feed and industrial use has boosted planting. Conversely, declines are expected in the EU due to unfavourable weather and revised planting areas. Global maize consumption is also expected to rise slightly (+0.3% y/y), reaching 1.5 billion tonnes, supported by increased use in feed and industry. In the first half of 2025, global maize prices fell significantly due to abundant supply from South America. In the medium term, prices are expected to remain on a downward trend. For the year, we forecast an average price of 200 USD/t, which is a drop of about 2% compared to 2024.
Soybeans – Global soybean production is expected to grow slightly in 2025, according to the FAO (+1.4%, 427 Mt), following a 6% increase last season. Growth is mainly concentrated in Brazil, while production remains stable in Argentina and the US. Only Europe, notably France, is expected to see a decline in its modest output. On the demand side, China has been the main driver of global demand, which is now stabilising. While Beijing has already shifted its imports away from the US (-31% since 2017) towards Brazil (+48% over the same period), recent retaliation over tariffs by Chinese customs is likely to reinforce this trend. We therefore expect relatively stable prices in 2025 (8% y/y), around 375 USD/t.
Rice – Global rice production is expected to increase again in 2025 according to the FAO, mainly due to an expansion of cultivated areas of almost 1%. Production has reached a record level of 552 million tonnes by milled equivalent. Rice consumption growth will remain strong (+2% y/y), driven notably by several African countries. Consumption is expected to reach an all-time high. The reopening of Indian rice exports in October last year also contributed to falling prices on international markets. We forecast a price of 400 USD/t in 2025, a drop of nearly 30% compared to the 2024 average.
Agri-food
