Meteorologists indicate a potentially strong El Niño event may form later this year, heightening concerns over global food security. Notably, this "super El Niño" could emerge against a backdrop where conflict in Iran has already triggered sharp increases in fuel and fertilizer prices, spreading market anxiety. An analyst told CNBC that El Niño could drive up prices for cocoa, edible oils, rice, and sugar. Climate scientists warn that the likelihood of a global warming-type El Niño occurring in the coming months is increasing. The U.S. weather agency estimates a one-third probability of a "strong" weather event forming between October and December. European climate models suggest an even higher chance of an extremely strong or "super El Niño," although so-called spring forecast barriers mean these predictions may be subject to deviation.
Chris Jaccarini, Senior Analyst for Food and Agriculture at the Energy and Climate Intelligence Unit, stated that 2026 could once again be a year where conflict and climate risks converge, resulting in significant costs. Since military actions involving the U.S. and Israel against Iran began, the blockade of the Strait of Hormuz has caused global fertilizer prices to surge, potentially endangering worldwide food production and supply capacity. Media reports highlight that among the essential nutrients for food production—nitrogen, phosphorus, and potassium—nitrogen-based urea and ammonia, which promote leaf and stem growth, are produced by extracting hydrogen from natural gas and synthesizing it with atmospheric nitrogen. Gas-rich Gulf countries such as Qatar, Saudi Arabia, and Oman are major exporters. Following the outbreak of conflict, World Bank statistics show a 54% month-on-month surge in urea prices in March. The World Bank's commodity price outlook indicates the international price of urea reached $726 per ton, a sharp increase from $472 the previous month and more than 1.8 times higher year-on-year, marking the highest level since April 2022 when fertilizer prices soared due to the Russia-Ukraine conflict.
Bank of America had previously warned that the conflict could threaten 65% to 70% of global urea supplies, with prices already rising 30% to 40%. John Baffis, Senior Agricultural Economist at the World Bank, analyzed that disruptions to Middle Eastern shipping routes are affecting not only fertilizers and energy but also materials essential for food production. The World Bank, International Monetary Fund (IMF), and UN World Food Programme warned that sharp increases in oil, gas, and fertilizer prices triggered by the Middle East conflict will inevitably lead to higher food prices and food security issues. In a joint statement issued after a meeting on the Middle East conflict, the leaders of these global institutions noted that the most vulnerable populations, particularly those in low-income, import-dependent economies, would be hardest hit. They stated that the agencies would continue to monitor developments closely and "coordinate the use of all available means to support those affected by the crisis."
The joint statement added, "The Middle East conflict is upending lives and livelihoods in the region and beyond. It has triggered one of the most significant disruptions to global energy markets in modern history." "Sharp increases in oil, gas, and fertilizer prices, combined with shipping bottlenecks, will inevitably lead to higher food prices and food security concerns." The UN Food and Agriculture Organization (FAO) reported that global food prices rose in March to their highest level since last September, driven by higher energy prices and increased freight costs due to the Middle East conflict. If the conflict persists, food prices could climb further.
Food security holds strategic importance. The 2026 "No. 1 Document" continues to emphasize safeguarding national food security and stabilizing grain and oil production. It首次 stresses "intensifying implementation" of a new initiative to increase grain production capacity by billions of kilograms, aiming to maintain grain output at around 1.4 trillion kilograms. It also首次 proposes "implementing projects to improve the quality and efficiency of grain circulation" and effectively implementing cross-provincial horizontal compensation policies between grain-producing and grain-consuming regions.
Hua'an Securities noted that tight staple food supply, combined with geopolitical conflicts disrupting global agricultural supply chains, further reinforces the underlying logic for food security. Additionally, external trade frictions increase market uncertainty, attracting safe-haven capital to the grain sector due to its rigid demand and low valuation characteristics. Guojin Securities pointed out that against a backdrop of strong external uncertainties, China continues to promote seed industry revitalization and increase grain yields through higher per-unit productivity. Meanwhile, global weather disruptions may lead to some decline in overall crop production. The planting sector's performance has bottomed out; if substantial reductions in grain output occur, the planting industry chain could see improved prospects.
Relevant concept stocks include: SINOFERT (00297): SINOFERT reported 2025 revenue of RMB 232.63 billion, up 9.40% year-on-year. Profit attributable to shareholders was RMB 12.59 billion, an increase of 18.66% year-on-year. Basic earnings per share were RMB 0.1793, with a final dividend of HKD 0.0693 per share. The company attributed revenue growth primarily to higher average selling prices. Sales volume reached 7.31 million tons, a slight increase of 1.39% year-on-year; bio-fertilizer sales were 1.54 million tons, up 14% year-on-year. Profit growth was driven by the group's steadfast advancement of its "Bio+" strategy, continuous enhancement of product technological content, strengthened quality control and cost management, and improved efficiency across procurement and sales processes, leading to higher gross profit compared to the previous year.
CHINA XLX FERT (01866): In 2025, CHINA XLX FERT achieved operating income of RMB 253.5 billion, an increase of nearly 10% year-on-year, reaching a record high. Net profit attributable to shareholders was approximately RMB 9.32 billion. The group fully applied dual-coal blending technology in 2025 while advancing specialized cost-reduction technical transformations, effectively reducing production costs by 13% and achieving comprehensive energy consumption 10% lower than the industry average. Additionally, the company saw a significant increase in overseas orders in 2025, with the proportion of overseas revenue rising by 4 percentage points year-on-year, indicating sustained momentum in international business growth.
October Fields (09676): The company is primarily engaged in the production and sale of staple food products in China. It operates three segments. The rice products segment mainly produces various categories of pre-packaged rice products. The coarse cereals, beans, and other products segment focuses on pre-packaged brown rice, millet, red beans, and sesame. The dried goods and other products segment produces pre-packaged black fungus, white fungus, lotus seeds, and by-products such as bran, rice hulls, and broken rice. The company primarily operates in the domestic market.
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