JPMorgan warns of potential food supply shocks in 2027 amid El Niño and fertiliser shortages

JPMorgan has warned that the world could face a fresh food-supply shock in 2027 if a powerful El Niño coincides with fertiliser shortages and elevated energy prices. The bank said the risk is not an abrupt emptying of supermarket shelves, but a slower squeeze on farm economics: higher input costs, weaker yields and, eventually, firmer food inflation. A report cited by Energy News said JPMorgan sees global inflation reaching about 5% in the first half of 2027, up from 2.8% in the firs...

India, Brazil and Indonesia were singled out as especially exposed because food matters more to consumer budgets there and because farm output is more weather-sensitive, JPMorgan said. That view broadly matches a July assessment by S&P Global, which said El Niño could lower rainfall and lift temperatures across India, Indonesia, Australia and parts of South America, with wheat output in Australia and the US likely to fall and India’s wheat crop potentially dipping. (energynews.oedigital.com)

The fertiliser channel is central to the warning. JPMorgan has linked the risk to disruptions in the supply of nitrogen-based products such as urea and ammonia, noting that the Middle East accounts for roughly 42% of global urea exports and 27% of ammonia exports, making the region critical to agricultural supply chains. A separate June analysis by the World Economic Forum, published by S&P Global, said El Niño should be seen as a systemic shock rather than just a weather event, because it can hit food systems, public finances, energy markets and trade flows at the same time. (energynews.oedigital.com)

S&P Global’s July infographic added that El Niño, which developed in early July, may persist until April 2027, according to the National Oceanic and Atmospheric Administration. The firm said soybean output in Brazil and Argentina could also decline, while Malaysia’s palm oil production may weaken. By contrast, JPMorgan said global grain stocks remain relatively comfortable and rice supplies in Asia are still healthy, which could soften the blow even if prices move higher. (spglobal.com)

For India, the bigger concern is likely to be the cost of production rather than outright availability. JPMorgan pointed to the possibility that weaker or erratic monsoons could hit rice, pulses, oilseeds, cotton, sugar cane and other rain-dependent crops, feeding through from farmgate prices to wholesale and then retail inflation. In that sense, the coming threat is less a sudden famine than a broad-based erosion in affordability, especially if weather disruption arrives alongside expensive energy and strained fertiliser supply. (energynews.oedigital.com)

Source: Noah Wire Services