--- title: "El Niño is here, could global grain prices rise with a new driving force?" type: "News" locale: "en" url: "https://longbridge.com/en/news/288236834.md" description: "According to data from the Food and Agriculture Organization of the United Nations, global food prices have risen for three consecutive months. The El Niño phenomenon, combined with geopolitical disturbances and rising costs, is expected to keep the upward trend in food prices continuing until the second half of 2026. The FAO pointed out that rising costs for fertilizers and other inputs will suppress production, and the U.S. Department of Agriculture report also confirms the expectations of reduced output from major exporting countries, exacerbating price pressures on the supply side" datetime: "2026-06-01T08:04:12.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/288236834.md) - [en](https://longbridge.com/en/news/288236834.md) - [zh-HK](https://longbridge.com/zh-HK/news/288236834.md) generator: "portal-rs" --- # El Niño is here, could global grain prices rise with a new driving force? **Recently, many investors have been asking: El Niño is coming, coupled with the United Nations Food and Agriculture Organization's statement on May 20 that "global food prices have risen for three consecutive months" and "the blockade of the Strait of Hormuz could trigger a severe global food price crisis within 6 to 12 months." How far can the global food price surge go?** The preliminary judgment is: this rise in food prices is not a short-term pulse, but rather a resonance of three factors: "climate shock + geopolitical disturbances + cost push," which may last until the second half of 2026. Below, we will explore this from three angles: first, what signals were released by the latest data from the FAO on May 20; second, how the El Niño transmission chain affects the A-share food industry chain; and third, how to use ETF tools if one wants to lay out this main line. 1. FAO's latest food price data: rising for three months, why is this time different? Around May 20, the United Nations Food and Agriculture Organization released the global food price index for April, **the index stood at 130.7 points, up 1.6% month-on-month and 2.0% year-on-year, marking three consecutive months of increase**. Breaking it down: **Grain price index** rose 0.8% month-on-month and 0.4% year-on-year in April, with prices of major grains (excluding sorghum and barley) rising across the board; **Vegetable oil price index** surged **5.9%** month-on-month in April, with palm oil, sunflower oil, and rapeseed oil all increasing; **Fertilizer prices** have been significantly pushed up due to the blockade of the Strait of Hormuz and rising energy costs, which in turn suppresses farmers' willingness to use fertilizers, leading to a downward impact on grain production. The United Nations Food and Agriculture Organization recently stated: "The greatest impact of this crisis may not be immediately apparent but will gradually emerge over the months. Due to reduced planting areas, decreased fertilizer application, or farmers' inability to bear production costs, agricultural output may be severely affected." In other words, **what we are seeing now may only be the first wave of price increases, and the impact on fertilizers and seeds is just beginning**. The U.S. Department of Agriculture's May supply and demand report also corroborates this: **global wheat production for the 2026/27 season is expected to decrease by 24.78 million tons, a decline of 2.94%**, with major exporting countries such as the United States, the European Union, Argentina, and Australia all reducing production. Expectations on the supply side are already being adjusted. 1. El Niño: Upgrading food prices from "Middle East crisis" to "global crisis" If the FAO data reflects the line of geopolitical conflict, then El Niño is another more persistent main line. **(1) What is the probability and intensity of this El Niño?** **The U.S. Climate Prediction Center (NOAA) stated on May 14: The probability of El Niño forming during May to July this year is as high as 82%, with a 96% probability of lasting until the winter of 2026-2027 in the Northern Hemisphere;** Models from the World Meteorological Organization, NOAA, and the European Centre for Medium-Range Weather Forecasts (ECMWF) **all point to a strong El Niño, with the ECMWF model clearly indicating a super strong El Niño;** NOAA predicts a strong El Niño with a high probability of being super strong.\*\* Citigroup's latest warning: **The blockade of the Strait of Hormuz + the formation of a super strong El Niño is creating a historically rare "double whammy" pattern,** with two shocks overlapping, leading to a "serious upward risk" in agricultural prices over the next 6-12 months. **(2) Historical Review: Super Strong El Niño = A Year of Abundant Agricultural Production** From the super strong El Niño events of 1877-1878, 1982-1983, 1997-1998, and 2015-2016, **each one has had a profound impact on global agricultural production and the commodity market.** Historical data shows that **the high operation of the Oceanic El Niño Index is highly correlated with the rise in global grain and fertilizer prices**—such as from 2008 to 2009, 2010 to 2011, and 2021 to 2022. Chart: Abnormal weather since 2000 shows a strong correlation with grain and fertilizer prices ![Image](https://imageproxy.pbkrs.com/https://inews.gtimg.com/om_bt/OeNk8dDqwhGOZjccQMB-EwQUcOXbfKRAxty1CQSxynmykAA/641?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg) Data source: Wind, as of April 2026, the definition of abnormal weather phenomena refers to: Phenomenon Sea temperature anomaly threshold (Niño 3.4 region) Duration requirements El Niño ≥ 0.5℃ (abnormally warm) must last at least 5 months La Niña ≤ -0.5℃ (abnormally cold) must last at least 5 months **(3) Specific to varieties, the impact chain is very clear** **Corn/Rice**: Domestic production is easily disturbed by excessive rainfall, **with both U.S. corn and domestic corn likely to experience some degree of tightening supply in 2026;** **Palm Oil**: Most significantly affected by the lagging impact of El Niño, **a high probability of reduced production 8-12 months later**, with short-term price pressure in Q3 2026, and expected strength in Q1 and Q2 2027; **Sugar**: Reduced sugarcane production in India and Thailand, with global sugar supply likely tightening in the 2026/27 crushing season; **Cotton**: Production reduction in major Asian producing areas, with increased production in Brazil and the U.S., leading to a narrower decline in global output compared to previous years. Three, A-share Reflection: Which segments of the grain industry chain are likely to benefit? Under the dual catalysis of climate and geopolitics, the beneficial paths of the grain industry chain can be broken down into three segments: "Seed Industry → Agricultural Inputs → Planting": **1\. Seed Industry (Core Elastic Segment)**: Rising grain prices directly enhance seed value. More importantly, **domestic genetically modified corn has been approved for planting in 13 provinces, entering nationwide regular promotion in 2026, with seed prices and market space opening up simultaneously.** **2\. Agricultural Inputs (Fertilizers/Pesticides)**: Fertilizer prices are rising due to energy and the blockade of the Strait of Hormuz, with domestic agricultural input leaders likely benefiting from the logic of "increased demand for high-quality agricultural inputs." **3\. Planting**: Directly benefits from rising grain prices. If you don't want to get entangled in stock-level issues like "which is more elastic, seed industry or fertilizer stocks," **using index-based tools to cover the entire grain industry chain in one go is an efficient approach worth considering**. **Grain ETF E Fund (159038)** tracks the National Grain Industry Index (399365), covering the upstream, midstream, and downstream of the grain industry chain: **Upstream Agricultural Inputs**: Salt Lake Potash, Zangge Mining, and other leading fertilizer companies are expected to benefit from the elasticity of rising agricultural input prices. **Midstream Seed Planting**: Dabeinong, Longping High-Tech, and other leading seed companies are expected to benefit from technological breakthroughs and the recovery of grain prices. **Midstream Grain Planting**: Beidahuang, SuKen Agriculture, and other large-scale agricultural enterprises are expected to benefit from rising grain prices. There is a clever design in the index compilation: **the combined weight of seed and grain planting-related samples is no less than 60%**, with a maximum weight limit of 15% for any single seed/planting stock, significantly higher than the 3% limit for other segments. This means the index covers the entire industry chain while emphasizing the seed and planting segments within the chain. 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