S&P Global warns of risk of global food crisis in 2027

Fertilizer and fuel shortages, rising production costs and adverse weather conditions associated with El Niño could lead to a global food crisis in 2027. This is according to a report released by S&P Global on October 19. Analysts note that the combined impact of these factors could constrain agricultural production in major producing countries.

One of the key risks is disruption to fertilizer and energy supplies due to the war between the United States and Iran and reduced shipping traffic through the Strait of Hormuz. Around 30% of globally traded urea, about half of global sulfur trade and 21% of ammonia shipments pass through the strait. Higher natural gas prices, with gas used both as a feedstock and as fuel in fertilizer production, are also increasing costs for farmers beyond the Middle East.

According to S&P Global, Brazil’s corn production forecast has been reduced by 6 mln tonnes to 137 mln tonnes. If El Niño intensifies, output could fall by a further 10 mln tonnes. The country’s soybean production forecast has also been lowered by 6 mln tonnes to 177 mln tonnes. Australia’s wheat crop could reach 22 mln tonnes, compared with the current forecast of 28 mln tonnes, while India’s wheat production faces additional downside risks due to below-average rainfall.

Higher diesel prices are adding further pressure to the agricultural sector by increasing the costs of fieldwork, harvesting and transportation. High oil prices are also making biofuels more competitive, supporting demand for the crops and vegetable oils used in their production. According to the report’s authors, this limits the market’s ability to redirect agricultural commodities towards food production.

Low-income countries face the greatest risks, as food accounts for about half of household spending in these economies. However, S&P Global stresses that a global food crisis is not inevitable, although the conditions for one are already emerging. The impact on global agricultural production will depend on how long disruptions to energy and fertilizer supplies persist, as well as weather conditions in key agricultural regions.

Tags: crop forecast, fuel, corn, prices, soybean, wheat, fertilizers, food security