Goldman Sachs Warns of Food-Supply Shock in Southeast Asia

Goldman Sachs warned that Southeast Asia faces a food-supply shock, as costlier oil and fertilizer from the Middle East conflict collide with the threat of a strong El Nio event later in 2026. The investment bank estimates the combined pressures could add an average of 1 percentage point to regional food inflation after six months, building to 2.1 points after a year before easing. Goldman stressed its numbers reflect added pressure on the usual trend, not a full inflation forecast. Why the Food Shock Risk Is Building The warning stems from the Middle East conflict, which lifted oil prices and disrupted fertilizer shipments. Energy sits at the heart of both farming costs and food transport. Goldman noted that the oil shock has shown up in fuel-sensitive CPI items, while climbing fertilizer prices stand to push up costs for farmers. According to the bank, that combination will leave regional governments weighing a difficult choice between food and fuel. Goldman framed the El Nio threat as the next key factor. The World Meteorological Organization estimatesthe odds of an El Nio eventduring June and August 2026 at 80%. Those odds climb further out as the organization expects El Nio to remain dominant, with the probability holding near or above 90% through at least November. A potential strong El Nio event in late 2026 could create another food-supply shock just as oil and fertilizer pressures are passing through the food chain, the investment bank added. El Nio development is currently more advanced than at the same stage of previous super El Nio events in 2015, 1997 and 1982.But the oceans are much warmer now, and that means the atmospheric response to El Nio this year will be different from the past. The Countries Most Exposed To a Food Shock Meanwhile, the bank highlighted Singapore and the Philippines as among the economies most exposed to global food price shocks, given their dependence on imported food supplies. Malaysia and Indonesia look better shielded thanks to palm oil. Strip out that sector, though, and both turn into net food importers. Thailand imports more than 90% of its fertilizer. That exposes the country to global price shocks through higher farm input costs. The strain extends beyond the region, with India also facing weaker monsoon rains that may impact its sugar exports. However, not everyone sees a crisis. Global stocks and harvests of rice and other cereals could cushion the blow, according to UN Food and Agriculture Organisation (FAO) economist Shirley Mustafa.