{"id":63840,"date":"2026-06-27T00:38:13","date_gmt":"2026-06-27T04:38:13","guid":{"rendered":"https:\/\/www2.stockmarketwatch.com\/stock-market-news\/goldman-sachs-warns-of-looming-southeast-asia-food-supply-shock\/63840\/"},"modified":"2026-06-27T00:38:13","modified_gmt":"2026-06-27T04:38:13","slug":"goldman-sachs-warns-of-looming-southeast-asia-food-supply-shock","status":"publish","type":"post","link":"https:\/\/www2.stockmarketwatch.com\/stock-market-news\/goldman-sachs-warns-of-looming-southeast-asia-food-supply-shock\/63840\/","title":{"rendered":"Goldman Sachs Warns of Looming Southeast Asia Food Supply Shock"},"content":{"rendered":"<h2>Key Takeaways<\/h2>\n<ul>\n<li><strong>Goldman Sachs (<a href=\"\/stock\/GS\">GS<\/a>)<\/strong> warns that Southeast Asia faces a significant food supply shock, potentially adding <strong>2.1 percentage points<\/strong> to regional food inflation over the next 12 months.<\/li>\n<li>The crisis is driven by a &quot;compound shock&quot; of soaring <strong>oil and fertilizer prices<\/strong> linked to the ongoing Middle East conflict and the <strong>80-90% probability<\/strong> of a strong El Ni\u00f1o event in late 2026.<\/li>\n<li><strong>Singapore<\/strong> and the <strong>Philippines<\/strong> are identified as the most vulnerable nations due to their status as net food importers, while <strong>Thailand<\/strong> faces high exposure because it imports over <strong>90%<\/strong> of its fertilizer.<\/li>\n<li>Regional food inflation is expected to rise by an average of <strong>1 percentage point<\/strong> within the first six months before peaking a year after the initial shock.<\/li>\n<\/ul>\n<h2>Middle East Tensions Drive Input Costs<\/h2>\n<p>Goldman Sachs (<a href=\"\/stock\/GS\">GS<\/a>) reports that the conflict in the Middle East has severely disrupted energy and chemical supply chains, particularly through the <strong>Strait of Hormuz<\/strong>. This maritime passage typically carries roughly <strong>30%<\/strong> of internationally traded fertilizers and <strong>20%<\/strong> of global liquefied natural gas (LNG), a critical feedstock for nitrogen production.<\/p>\n<p>As a result of these disruptions, granular urea prices have surged by <strong>50%<\/strong>, reaching approximately <strong>$750 per metric ton<\/strong>. These escalating costs are already appearing in fuel-sensitive components of the Consumer Price Index (CPI), forcing regional governments to choose between subsidizing food or fuel.<\/p>\n<h2>The El Ni\u00f1o &quot;Super&quot; Event Threat<\/h2>\n<p>Compounding the geopolitical risk is the high likelihood of a &quot;Godzilla-strength&quot; <strong>El Ni\u00f1o<\/strong> event beginning in the second half of 2026. The <strong>World Meteorological Organization (WMO)<\/strong> currently places the odds of this event at <strong>80%<\/strong> between June and August, rising to above <strong>90%<\/strong> through November.<\/p>\n<p>Historically, strong El Ni\u00f1o patterns lead to severe droughts across Southeast Asia, which can reduce global rice yields by <strong>1% to 1.5%<\/strong>. For a region where rice is a primary staple and a major export for countries like <strong>Vietnam<\/strong> and <strong>Thailand<\/strong>, such a yield hit could trigger aggressive export restrictions and further price spikes.<\/p>\n<h2>Regional Vulnerabilities and Market Impact<\/h2>\n<p>While the entire region is at risk, Goldman Sachs (<a href=\"\/stock\/GS\">GS<\/a>) notes that <strong>Indonesia<\/strong> and <strong>Malaysia<\/strong> may have a slight buffer due to their domestic palm oil industries. However, both remain net food importers when palm oil is excluded from the trade balance.<\/p>\n<p>In contrast, the <strong>Philippines<\/strong> has already felt the strain, with President Ferdinand Marcos Jr. declaring a state of national emergency earlier this year as fuel reserves dwindled. Analysts suggest that if the current supply gap in fertilizers is not addressed by the next planting cycle, the physical impact on harvests could extend the food security crisis well into <strong>2027 and 2028<\/strong>.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Key Takeaways Goldman Sachs (GS) warns that Southeast Asia faces a significant food supply shock, potentially adding 2.1 percentage points 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