A new El Niño cycle has begun—potentially reaching record intensity—raising supply-side risks for agricultural products. Should prices rise, it could drive a performance recovery for seed companies and firms holding land assets.

Driven by a combination of geopolitical conflicts and extreme weather, global agricultural prices have surged significantly. CBOT (Chicago Board of Trade) wheat and corn futures have both hit multi-year highs, fueled by the convergence of policy tailwinds and industry prosperity.

Global Agricultural Prices Jump Over 13% in August

Geopolitical conflicts and adverse weather have triggered a price rally in global agricultural markets, intensifying concerns about food inflation.

Among the key drivers of this rise, the CBOT wheat continuous contract gained approximately 20% in August, closing at 766 cents per bushel—a high not seen since March 2023. The CBOT corn continuous contract rose 16% over the same period to 511 cents per bushel, reaching a high not seen since August 2023.

Wheat has been the primary driver of this rally. Mutual attacks on ports and cargo vessels by Russia and Ukraine have brought grain exports from both nations in the Black Sea and Sea of ​​Azov regions to a near-standstill, resulting in a loss of over 97% of export capacity. Russia supplies 41 million tons of wheat to the global market, ranking first in exports, while Ukraine is also a major global wheat exporter; simultaneous disruptions to exports from both countries have exacerbated global supply tightness.

Climate issues have further fueled market concerns regarding grain supplies. Monitoring by NOAA (National Oceanic and Atmospheric Administration) indicates that global conditions shifted to an El Niño state in May 2026, with the event's intensity steadily increasing. It is projected to peak in the autumn/winter of 2026 and persist through the spring/summer of 2027. There is a 95% probability that the event will reach "super" intensity in the fourth quarter of 2026, and a nearly 70% probability that its peak intensity will surpass the record high set since 1950. El Niño events are often associated with an increased risk of regional droughts, floods, and extreme heat; furthermore, the conclusion of a strong El Niño event is frequently followed by a La Niña event, potentially causing prolonged disruptions to agricultural production.

A Series of Favorable Domestic Agricultural Policies Released

Amid surging international grain prices and supply chain pressures, efforts to establish institutional frameworks ensuring food security are accelerating. Recently, a series of significant, favorable policies for the agricultural sector have been rolled out in rapid succession.

This year’s "No. 1 Central Document" designated the revitalization of the seed industry as a core task for agriculture and rural development, signaling a clear policy direction. On August 28, the newly revised griculture Law of the People's Republic of China was passed; it explicitly mandates the implementation of a national food security strategy and requires the establishment and refinement of systems for food security monitoring and early warning, government grain reserves, and emergency grain management. On August 21, the Ministry of Agriculture and Rural Affairs issued the 15th Five-Year Plan for the Development of the National Agricultural Product Origin Market System, outlining a comprehensive strategy for building a modern distribution system for agricultural products.

Alongside this wave of policy support, positive signals have emerged from market fundamentals. In the first half of the year, my country's crop farming sector maintained steady and improving performance. Data from the Ministry of Agriculture and Rural Affairs indicates that summer grain production overcame challenges such as widespread late sowing and multiple rounds of rainfall during the harvest period; output reached 301.49 billion jin—surpassing the 300-billion-jin mark for the first time—thereby laying a solid foundation for the year's overall grain production. (Source: Securities Times)

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