Huatai Securities says multiple meteorological agencies now forecast an El Niño
in 2026 that could produce east-wet/west-dry extremes and disrupt bulk
agricultural supplies. Drought in India and Thailand, export restrictions and
Brazil’s sugar-to-ethanol diversion are expected to shift global sugar
supply-demand from surplus toward a modest deficit, increasing upside risk to
sugar prices. Severe drought would also hit palm oil and natural rubber—both
highly concentrated in Southeast Asia—with historical strong-El Niño episodes
showing pronounced upward price elasticity. Soybeans and corn are expected to
see only marginal impacts. Huatai recommends monitoring sugar, natural rubber
and palm oil supply chains.
