El Niño could put pressure on companies' input and freight costs in 2027
Inpe and Inmet bulletins indicate a 95% chance of a very strong El Niño by the end of 2026, with effects on costs that could reach companies the following year.
BY THE X-TRADER NEWS NEWSROOM · REPORTING FROM TIMES BRASIL · 2 MIN
According to Times Brasil, Bulletin 4 of the El Niño Panel 2026-2027, prepared by Inpe and Inmet, indicates a 95% probability that the phenomenon will reach very strong intensity between October and December this year. The warning goes beyond the climate: the same report indicates that the impacts on inputs and freight could reach companies' cash flow in 2027.
The peak of El Niño is predicted for the end of 2026. The lag is the point that interests most those who follow balance sheets. According to Times Brasil, the price transfer tends to occur after the peak, which pushes the effect to the following year and makes it difficult to immediately read who will be affected.
In practice, inputs and freight usually cross a large part of the production chain. When they rise, the pressure first appears on the margins of those who buy and transport, and only then can it reach the consumer. That's why a climate phenomenon interests economists and financial directors months in advance.
The bulletin also brings a regional contrast. According to the forecast cited by the report, rainfall should be above average in the South, while there is a risk of drought in parts of the North, Northeast and Central-West. This situation is relevant because dry regions tend to affect agricultural production and logistics, precisely the two points that fuel cost pressure.
What is at stake is each company's ability to absorb or pass on increases in a period in which the scenario can still change. The Panel's next bulletins will be the way to check whether the predicted intensity is confirmed.
What changes for the investor
For those who invest in the stock market, interest rates and the dollar, the potential effect is on the companies' profit margin, and not on a target price. Companies with a large weight of inputs and freight in their cost structure may feel the pressure sooner or more strongly, while those with transfer power tend to go through the period with less wear and tear. As the transfer is delayed, the impact on results may appear in 2027, and not necessarily at the end of 2026. It is worth monitoring the next bulletins and communications from companies about costs. This analysis is not a recommendation to buy or sell.
Automatically translated from Portuguese.
