El Niño, Energy Prices, and Fertilizer Shortages: A Perfect Storm for Food Inflation

JPMorgan analysts have warned of accelerating food inflation and food supply remaining under pressure in some regions next year, according to Modern.az.

The main concerns include possible shortages in fertilizer supply, persistently high energy prices, and a strong El Niño weather event that could cause serious problems in the global food market in 2027.

JPMorgan notes that fertilizer production is closely linked to energy, especially natural gas, and a significant portion of the urea used worldwide is imported from the Persian Gulf region. The conflict around Iran and disruptions to transport routes in the region create additional risks for the production and transportation of fertilizers.

The bank's analysis also highlights the impact of a disruption in nitrogen fertilizer production on agricultural productivity, which could lead to decreased crop yields and higher food prices. JPMorgan estimates that the simultaneous persistence of a strong El Niño and high energy prices could add 1.3-1.5 percentage points of additional pressure to global food inflation, potentially reaching 5 percent on an annualized basis in the first half of 2027.