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Macro Economy•4 June 2026•

2 min read

UBS Warns El Niño Could Trigger Resurgence in Asian Food Inflation

Key Facts

1UBS warned that the El Niño weather event could create a second-order shock to global food supply chains and intensify inflation across Asia.

2Thailand white rice prices surged 20% in May, marking the largest monthly increase since 2008.

3UBS estimates the probability of El Niño at 82% for May-July and 96% by December.

Amid escalating concerns over global climate disruption, UBS analysts have warned that the El Niño weather pattern could trigger a second-order shock to food supply chains and intensify inflation across Asia. According to reports, the combination of high fertilizer costs and extreme weather may extend food inflation pressures through 2027. Thailand's white rice prices have already surged by 20% in May, marking the largest monthly increase since 2008, while the bank estimates an 82% probability of the event occurring between May and July.

These warnings come at a sensitive time for Asian economies already grappling with supply chain pressures, as market data shows commodity prices reacting to anticipated crop shortages. Looking at regional economic performance, China's Manufacturing PMI stood at 51.8 in June 2026 per market data, indicating growth that could face headwinds if agricultural input costs spike. Furthermore, South Korea's inflation rate rose to 3.1% YoY in June, reinforcing fears of persistent price pressures across the continent.

Traders should monitor agricultural commodity levels and their impact on food sector equities, with the 0R3T.L instrument at its current levels (close June 5, 2026). On the economic calendar, the upcoming Indonesia Balance of Trade data on June 2, 2026, will be a key catalyst to watch for early signs of climate impact on agricultural exports, alongside further updates from meteorological agencies regarding the intensity of El Niño toward the end of the year.