Ocean Heat Record in June Sets Up a Strong El Niño for 2026

Global sea surface temperatures hit a record for June, pushing past the highs set during the 2023–24 El Niño years. The average across tropical and temperate oceans now sits just under 21°C, up from about 19.6°C before industrialization. Of all the extra heat trapped by greenhouse gases, more than 90% has gone into the oceans. In 2025, the heat added was equivalent to about 12 Hiroshima-scale nuclear bombs exploding every second, according to climate researchers.

That heat doesn't stay in the water. Hotter oceans fuel stronger cyclones, a more humid atmosphere, more intense rainfall, and more heat in air masses over the seas. Those air masses can make heatwaves over land more likely and more intense.

The El Niño forming in the tropical Pacific right now is likely to be a big one. Sea surface temperatures in the central eastern Pacific are about 1.24°C above average. Subsurface conditions in the eastern Pacific are more than 6°C above average. A typical El Niño lasts about a year, with the full atmospheric effect becoming clearest toward the end of the cycle. That means 2026 will be very hot, and 2027 is very likely to be even hotter.

The 6°C subsurface anomaly in the eastern Pacific is the kind of number that gets the attention of commodity desk analysts. It signals a large volume of warm water ready to be mixed to the surface as the El Niño matures. That means the atmospheric response – shifts in rainfall, cyclone tracks, and temperature patterns – could be stronger than the 2023–24 event.

For Australian wheat, the risk is a drier-than-normal growing season from April to October 2026. The 2023–24 El Niño cut Australian wheat production by about 30% year-on-year. A repeat would tighten global wheat supplies, already under pressure from Black Sea disruptions.

For palm oil, Indonesia and Malaysia face lower rainfall during El Niño, which reduces yields with a lag of 6–9 months. That could push palm oil prices higher in late 2026, affecting food inflation across Asia and the cost of biodiesel mandates.

In South America, the flood risk for Argentina's soybean and corn regions is highest during the Southern Hemisphere spring and summer. The 2023–24 El Niño brought heavy rains that delayed planting and damaged infrastructure. Traders should watch the Argentina soil moisture index and the Rosario Grains Exchange estimates.

Copper production in Chile and Peru faces disruption from heavy rains that can flood open-pit mines and wash out rail lines, forcing temporary shutdowns. The 2023–24 El Niño saw Chuquicamata and other mines temporarily shut. With copper inventories already low, any supply shock could amplify price moves.

Energy markets face a dual risk. The Gulf of Mexico hurricane season is typically more active during El Niño years due to reduced wind shear in the Atlantic, leading to a higher risk of production shut-ins. In the Pacific, stronger typhoons threaten LNG terminals in Japan, South Korea, and Taiwan. The 2023–24 season saw several major typhoons that disrupted shipping.

Insurance-linked securities are directly exposed. The cat bond market has grown to about $45 billion in outstanding notional. A major hurricane making landfall in Florida or Texas could trigger losses. Investors should monitor sea surface temperatures in the Gulf and the Caribbean, which are already above average.

Forecasters have improved their ability to predict marine heatwaves three to four months ahead in Australia, the US, and other regions. These forecasts allow fishery managers to reduce catches early and conservation groups to prepare. Funding for the ocean monitoring networks that feed these models is at risk. The US administration last year cut climate data gathering budgets and moved to dismantle the National Center for Atmospheric Research. If those data streams weaken, the ability to forecast commodity-disrupting weather events will degrade.

The subsurface heat in the Pacific is the canary. If it persists or grows, the 2026–27 El Niño could be one of the strongest on record. Commodity traders who ignore the ocean data do so at their own risk.