Food supply pressures in Southeast Asia are drawing renewed attention as higher energy prices linked to the Iran war, rising fertilizer costs and concerns surrounding El Niño add strain to agricultural markets across the region.
Goldman Sachs said the combination of those factors would add to existing food inflation pressures over the next year, with countries that depend heavily on imported food and farm inputs facing greater exposure. Singapore and the Philippines were identified as the most directly affected because both are net food importers.
The investment bank said costs stemming from the war in Iran have already appeared in fuel-sensitive consumer price index components. It added that rising fertilizer prices are increasing farm input costs, forcing governments to weigh spending priorities between food and fuel. CNBC reported the findings Monday.
Goldman estimated that volatility in oil markets, fertilizer prices and the effects associated with El Niño would add an average of 1 percentage point to Southeast Asia's food inflation after six months and 2.1 percentage points after 12 months. The figures represent additional pressure on top of existing food inflation trends, according to the bank.
The report came against the backdrop of disruptions in energy markets following the Iran war. Fuel plays a major role in agricultural production and transportation, meaning changes in oil prices are quickly transmitted through food supply chains. Research cited by the London School of Economics and Political Science found that energy costs are closely tied to commodity prices, including food.
Goldman said Malaysia and Indonesia appear more insulated because of their palm oil industries. However, excluding palm oil, both countries are net food importers. Thailand also remains exposed because more than 90% of its fertilizer requirements are imported, according to the bank.
Concerns over fertilizer availability have also been highlighted by the Organization for Economic Cooperation and Development. The OECD said in its latest Economic Outlook that prolonged disruptions involving fertilizer supplies from the Persian Gulf could raise prices and affect availability, adding that planting and harvesting cycles during 2026 and 2027 may be affected and yields reduced. The organization noted that higher energy prices and shortages of inputs such as urea, ammonia and sulfur have raised risks for agricultural production.
Separately, reports from Reuters showed that hot and dry conditions associated with a strengthening El Niño pattern have already affected planting and crop yields across parts of Asia. Farmers in India, Australia and Southeast Asia have faced lower rainfall and delays in sowing, while concerns have emerged over rice and palm oil output. Reuters also reported last week that global inventories of wheat, rice, corn and soybeans remain near multi-year highs, providing some buffer against supply disruptions.
Goldman said a strong El Niño event later in 2026 would add another source of pressure to food supplies as higher energy and fertilizer costs move through the agricultural supply chain.
