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Chelsea Yang

As a potentially record-setting El Nino threatens to push up global food prices – with an impact as great as the Iran war – some global investment banks have warned investors to pay more attention to the risk of “climate black swan” events: sudden, unexpected shifts in the climate with the power to upend markets.
The warning comes as the threat of a super El Nino disrupts the global rice market, as major Asian importers stockpile grain in anticipation of potential shortages. The trend could be creating the conditions for a renewed food-price shock, HSBC warned in a report published on Monday.
“Geopolitical and weather risks are colliding in Asia’s rice market,” HSBC economists Ines Lam and Frederic Neumann wrote.
The US National Oceanic and Atmospheric Administration has said there is an 81 per cent probability of a “very strong” El Nino developing between October and December, an event that could rank among the largest since records began in 1950.
It also sees a 97 per cent chance that El Nino conditions will persist into early spring 2027.
El Nino typically brings below-normal rainfall to parts of South and Southeast Asia. India’s cumulative southwest monsoon rainfall was already more than 20 per cent below its long-term average as of July 15, according to government data. In May, the Philippines warned that a severe event could reduce rice production by about 700,000 tonnes.
Importers are moving to secure supplies before shortages emerge. Malaysia has extended its rice-reserve target from three months to nine months and plans to increase stocks to 300,000 tonnes from 200,000 tonnes, a government minister said in April, according to the national news agency Bernama.
Indonesia is also building a record rice stockpile of 5.3 million tonnes, the country’s agriculture minister said in late June.
Just because an event is improbable does not mean it is impossible
Sarah Kapnick, JPMorgan
The surge in precautionary demand has helped lift Thai 5 per cent broken rice prices by more than 20 per cent in the first half of 2026, while the comparable Vietnamese benchmark rose 11.4 per cent, according to the HSBC report.
Meanwhile, farmers are facing renewed cost pressures. Fertiliser shipments through the Persian Gulf, a hub for roughly one-third of global urea exports, have slowed sharply amid renewed tensions around the Strait of Hormuz, according to the United Nations’ Food and Agriculture Organization. Rising diesel prices are also weighing on growers, a World Trade Organization analysis showed.
Yet, JPMorgan said abrupt climate shifts remained largely absent from conventional valuation models, leaving investors vulnerable to sudden losses and sharp market repricing.
The broader lesson for financial markets is that climate change may not unfold gradually, but rather through a string of “climate black swan” events – low-probability but potentially abrupt tipping points capable of invalidating the historical relationships on which many risk and valuation models depend, the Wall Street bank said.
“Just because an event is improbable does not mean it is impossible,” said Sarah Kapnick, JPMorgan’s global head of climate advisory, in a report published in April.
A survey cited by the bank found that none of 32 global banks had fully incorporated climate tipping points into their physical-risk assessments, while only 5 per cent had partially done so.
Some long-term investors are beginning to respond.
Hetal Patel, head of sustainable investment research at Standard Life, told Bloomberg on Sunday that the institution planned to begin developing a risk-management framework for climate tipping points next year.
The work will include simulations across its £317 billion (US$425 billion) portfolio to assess how different asset classes could be affected, Patel said.


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As the threat of a super El Nino disrupts Asia’s food market, global banks warn investors to prepare for sudden, unexpected climate shifts


As the threat of a super El Nino disrupts Asia’s food market, global banks warn investors to prepare for sudden, unexpected climate shifts.


Why the spectre of ‘climate black swan’ events is haunting global investors

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}As the threat of a super El Nino disrupts Asia’s food market, global banks warn investors to prepare for sudden, unexpected climate shifts

As the threat of a super El Nino disrupts Asia’s food market, global banks warn investors to prepare for sudden, unexpected climate shifts