Slow monsoon onset in India raises risks for crops and global agricultural markets

India’s 2026 monsoon season has begun well below normal, while the developing El Niño climate pattern is posing significant risks to the country’s rice, cotton, oilseed and other major crops. According to the US Department of Agriculture (USDA), the rainfall deficit could affect not only domestic production but also global agricultural commodity markets.

The India Meteorological Department forecasts seasonal rainfall at around 90% of the long-term average. However, there is an 84% probability that rainfall will remain below normal as El Niño continues to strengthen. As of June 15, cumulative rainfall was 32% below average, with some regions recording deficits of more than 90%.

The lack of rainfall has already slowed planting for the 2026 kharif season. As of early June, the total planted area was 3% lower than a year earlier. Cotton acreage declined by 23%, while oilseed plantings fell by 19%, including a 44% drop in groundnut acreage and a 60% decline in sesame plantings. In contrast, rice, pulses and corn planting areas expanded.

According to the US National Oceanic and Atmospheric Administration (NOAA) and the European Space Agency, the current El Niño event has a 63% probability of becoming one of the strongest since 1950. The World Economic Forum has warned that the phenomenon could become a systemic shock for global commodity markets, affecting agricultural trade, energy markets and logistics.

USDA expects El Niño to have its greatest impact between July and September, when India’s key kharif crops are developing. With the Indian Ocean Dipole currently remaining neutral, it is unlikely to offset the drying effects of El Niño on the southwest monsoon. The Indian government has already identified around 200 districts most vulnerable to drought and prepared contingency plans.

The situation is further complicated by extreme heat experienced across the country during April and May. Temperatures exceeded 45°C in several states and approached 48°C in some areas. Although overall reservoir storage remains above the 10-year average, several southern and eastern regions are already facing severe water shortages.

Concerns over crop production are already influencing agricultural markets. India plans to increase soybean imports to 700,000 tonnes in the MY 2025/26, up from 200,000 tonnes a year earlier. Meanwhile, domestic soybean meal prices have risen sharply, and the country’s sugar export ban is expected to remain in place through the 2026/27 season as authorities prioritize domestic food supplies and ethanol production.