El Niño risks put food prices and investor portfolios on alert

Global fund managers are adjusting investment strategies for El Niño-related weather disruption, with food prices, energy markets and emerging-market debt among their concerns, The Economic Times reported on October 21. For India, the account highlights monsoon weakness as one manifestation of the agricultural risks facing several regions.

The report describes rising food commodity prices and revisions to economists' inflation and deficit estimates as droughts and floods threaten crops. These pressures, investors warn, could compound the strain from elevated debt and borrowing costs.

The strongest prediction—that this could become the most powerful El Niño on record—is an investment manager's assessment, not an established outcome. The article does not present meteorological measurements or a dated scientific forecast demonstrating that a record will be reached.

Debt and borrowing costs complicate the response

Katie Self, a portfolio manager who co-manages Pictet's $5.1 billion Global Environmental Opportunities fund, argues that the consequences will extend far beyond the equatorial Pacific, where El Niño involves unusually warm ocean conditions. In her assessment, no region's markets will be completely insulated from the resulting disruption.

Analysts Kamesh Korangi and Rose Choy of the Anthropocene Fixed Income Institute identified Indonesia, Brazil and Colombia as especially vulnerable sovereign borrowers in a note cited by the report. Their concern is that higher interest rates, debt burdens and market volatility make the financial backdrop different from earlier El Niño episodes. The article does not detail the methodology behind that country ranking.

T. Rowe Price said it was using customised models to manage El Niño exposure across a $165 billion emerging-market debt and equity portfolio. Man Group had also warned in July of potential disruption affecting electricity-grid infrastructure, metals and fertiliser. These are risk assessments and portfolio preparations, not reported investment losses.

Investors look at energy and weather-resilience technology

Some investment strategies focus on interest-rate movements associated with a possible weather-driven rise in inflation. Energy is another area of attention: Zulfiqar Ali, founder and chief investment officer of ZAMS Asset Management, expects winter to bring climatic, geopolitical and structural pressures together, creating trading opportunities alongside risk.

Pictet's approach includes looking for businesses whose technologies help users withstand droughts and floods. Self cited smart irrigation, technologies supporting longer plant roots, storm-water drainage and flood-protection systems. These examples describe areas of investment interest; the report does not identify individual holdings or returns.

Self also argues that El Niño is interacting with an already warmer climate, potentially intensifying disruption. That is the basis for her emphasis on adaptation businesses rather than simply trying to avoid exposed markets.

India's monsoon exposure

The report says India experienced its weakest monsoon in more than a decade, while Southeast Asia faced forest-fire pollution and parts of South America struggled with floods or insufficient rainfall. It does not specify the Indian monsoon season or provide a rainfall total, so that statement should not be read as a quantified assessment of the 2026 season.

For India, the concrete concern is the connection between rainfall, farm production and food prices. The report offers no India-specific inflation forecast or estimate of crop losses, leaving the scale of any domestic economic impact unresolved.