El Niño Formation Intensifies Asian Drought: Wheat Up 20%, Rice Up 15%
Alina Collins
Wheat has risen roughly 20% since the start of 2026 and Southeast Asian rice prices jumped about 15% in the past month, driven by drought across India, Southeast Asia and Australia — and the expectation that one of the strongest El Niños on record will fully form in the second half, hitting Asian agriculture even harder.
What exactly is this grain rally pricing in?
Wheat is up about 20% year-to-date; rice at major Southeast Asian export ports climbed roughly 15% in the past month.
This means → the rally reflects anticipated shortfalls, not actual shortages today — markets are front-running the damage a full-blown El Niño could inflict in H2.
SkyFi meteorologist Chris Hyde noted that high-resolution satellite imagery already shows early drought signatures across Asia; the impact path starts in Southeast Asia, India and Australia, then spreads to the Americas.
India: the monsoon hasn't arrived — is the market already betting on export curbs?
India's weather bureau cut its four-month monsoon rainfall forecast again last week — monsoon rains account for roughly 70% of India's annual precipitation.
A global trader based in New Delhi said temperatures remain above normal across most of the country, and conditions for timely summer sowing are not in place.
In plain terms = India's summer crops — rice, soybeans, pulses, sugarcane, maize — all depend on the monsoon. A weak season hits them all.
Despite rice stockpiles reportedly "several times larger than needed," prices are still surging — a Singapore-based trader said this clearly shows the market is already pricing in export restrictions.
Southeast Asia: Thai farmers wait and watch; parts of Indonesia have had no rain for 10+ days
Thai farmer Nerawat Oramah in Chai Nat province: "If there isn't enough water, we may only get one crop this year." Thailand and the Philippines begin their main rice-planting season in June–July — the decision window is narrowing.
Indonesian meteorological data show that Java's most densely populated areas, plus parts of northern Sumatra, South Kalimantan and Sulawesi, have gone more than 10 days without rainfall; June precipitation is expected to stay at medium-to-low levels.
This means → Vietnam and Indonesia are planting their second crop right now; if the drought persists, second-crop yields will take the first hit.
Fertilizer shortages + El Niño: how much has Australia's wheat acreage shrunk?
KKP Research, under Thailand's Kasikorn Bank, noted that higher reservoir levels may buffer part of the drought impact, but flagged fertilizer supply as the bigger worry — in a worst case, rice output could fall 15% to 20%.
In plain terms = the fertilizer and diesel shortages triggered by the Iran war are hitting at the same time as El Niño drought — the two problems stacked together are far worse than either alone.
Australian farmer John Lowe near Burcher, New South Wales, said his actual planted area is still about 30% below its potential maximum; the Bureau of Meteorology forecasts rainfall 20–40 mm below normal across most farming regions of NSW and Queensland over the next three months.
Is the rally pricing expectations or reality — and where is the tipping point?
The current grain-price rally has not yet been accompanied by material supply shortages — markets are pricing expectations, not reality.
This means → whether India imposes export restrictions after early monsoon-season problems will be the key test of whether this rally can sustain.
This reflects a deeper pattern: El Niño + fertilizer shortages + geopolitical conflict — three lines are tightening simultaneously on Asia's food-supply safety margin.
Content is for reference only, not financial advice.