Fertilizer Shortages and El Niño Collide, Predicting Global Food Price Surge

A JPMorgan analysis predicts that global food costs will rise by five percent in the first half of 2027 due to converging threats from fertilizer shortages and a potentially powerful El Niño. The first threat is unfolding in the Persian Gulf, which supplies over 36% of the world's imported urea, a high-nitrogen agricultural fertilizer.

The Iran conflict has slowed fertilizer production, while disruption through the Strait of Hormuz has restricted exports and driven prices higher, according to Dr Sarah Kapnick, Global Head of Climate Advisory for JPMorgan. The shortages could begin hurting harvests within months, starting with South American corn before affecting wheat in the US and other major producers and rice crops across Asia.

El Niño, which occurs when unusually warm waters in the equatorial Pacific Ocean release heat into the atmosphere, threatens to place additional pressure on countries already struggling to obtain fertilizer. The climate phenomenon can shift rainfall, worsen drought, trigger floods, and intensify wildfires, with dramatically different effects depending on the region.