While production losses due to El Niño will exert upward pressure on food commodity prices in Asia and Australia, we believe the impact on food inflation will be regional and short-lived.

Upside risks to grain prices come from higher input (fertilizer, fuel oil) prices and the Russia-Ukraine war. Higher energy prices could impact food commodities by increasing the cost of production and boosting demand from the biofuel sector. 

The disruption in grain exports has so far been limited, despite the scrapping of the Black Sea Grain Initiative, but an escalation of that conflict remains a risk. The other risk involved is El Niño being stronger and/or going on longer than expected.