Key facts
- UBS warns that an impending El Niño event could intensify food inflation across Asia.
- Extreme heat and disrupted rainfall patterns associated with El Niño may hit agricultural growing belts.
- Global food prices are already rising due to fertilizer and elevated diesel prices.
- Thailand white rice prices surged 20% in May, a record increase since 2008.
- El Niño likelihood is 82% for May-July 2026 and 96% for December 2026-February 2027.
- Higher fertilizer costs may affect harvests from April 2027 onwards.
UBS analysts have warned that an impending El Niño event, combined with existing supply chain pressures from elevated fertilizer and diesel prices, could lead to a significant increase in food inflation across Asia. The concern is that extreme heat and disrupted rainfall patterns, typical of El Niño, may impact major agricultural growing regions, denting harvest output and amplifying existing supply stresses. This is already being signaled by rising global food prices, with Thailand white rice, a key Asian benchmark, surging 20% in May, the largest monthly increase since 2008. Chicago rice futures also saw a 15% surge last month. While urea prices have seen some correction, tight structural supply is expected to support pricing. Inflation is increasing across most major Asian economies, with the Philippines experiencing a sharp rise to 7.1% in April. Packaging and transport costs are also reportedly up. UBS forecasts an 82% chance of El Niño emerging by July 2026, continuing through early 2027, which could pressure harvests in South and Southeast Asia. Potential impacts include reduced sugar production in India, increased food inflation, higher electricity demand and coal imports due to extreme heat in Asia, and a potential rise in dengue cases in Brazil.