Global food prices could rise 5% in 2027 as fertilizer shortages and a potentially powerful El Niño converge to put additional pressure on agricultural production, according to a new JPMorgan analysis. The report warns that disruptions affecting fertilizer supplies could begin influencing harvests within months, while changing rainfall and temperatures could create additional risks for major food-producing regions. JPMorgan’s analysis points to the Persian Gulf as a critical pressure point because the region supplies more than 36% of the urea imported worldwide.

The potential impact stretches from South American corn fields to wheat-producing regions in the United States and Asia’s rice-growing areas. For consumers, particularly in the US, the risks could eventually show up through higher food and grocery prices, although a 5% increase is not guaranteed.

Fertilizer Shortages Create an Immediate Risk

Nitrogen is the world’s most widely consumed fertilizer by mass and is particularly important for corn, wheat and rice. JPMorgan estimates that these three crops account for more than half of global nitrogen-fertilizer demand.

Urea, one of the most widely used nitrogen fertilizers, is manufactured using natural gas and generally needs to be applied around planting time. That creates a narrow window for farmers.

According to the analysis, the Iran conflict has slowed fertilizer production while disruptions around the Strait of Hormuz have restricted exports and pushed prices higher.

Farmers facing shortages have limited choices: pay more to maintain fertilizer applications, use less and risk lower yields, or switch crops. Each option can increase costs or reduce the amount of food reaching global markets, by which global food prices could rise 5% in 2027.

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South America Could Face the First Major Test

Brazil could become one of the earliest major agricultural markets affected.

• Corn is planted across South America between September and January, while Brazil also relies heavily on imported nitrogen fertilizer from the Persian Gulf.
• Winter wheat planted from September across the US, Europe, China, India and Russia could face similar pressure.
• Fall and winter rice crops in India, Bangladesh, Indonesia and Vietnam are also exposed.
• Even if fertilizer disruptions end quickly, production may not immediately return to normal.
• JPMorgan estimates that fertilizer plants could take one to four years to regain full capacity, while damaged natural-gas facilities could require three to five years to recover.

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El Niño Adds Another Layer of Risk

The fertilizer problem is emerging alongside a potentially strong El Niño. The climate phenomenon develops when unusually warm equatorial Pacific waters release heat into the atmosphere, altering rainfall and temperature patterns far from the Pacific.

Its agricultural effects can differ sharply by region. JPMorgan’s report found that previous El Niño events were associated with an average 3.5% decline in agricultural production across tropical regions, compared with a 2.4% increase in temperate areas.

The greatest concerns are therefore concentrated in tropical agricultural producers such as Brazil and India, where exposure to El Niño overlaps with dependence on Persian Gulf fertilizer. Most forecasts cited in the report point toward El Niño developing, while the highest projections suggest an extreme event in which Pacific temperatures could reach about 3.6°F above normal.

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Why American Grocery Prices Could Still Rise

The US may avoid some of the most severe direct agricultural impacts, but American consumers are not isolated from global food markets. Lower harvests abroad can increase international crop prices, while more expensive fertilizer raises production costs for domestic farmers.

For shoppers, the JPMorgan warning does not mean supermarket prices will automatically rise by 5%. Better weather, stronger harvests elsewhere or alternative fertilizer supplies could reduce the impact.

But the combination of fertilizer shortages, disrupted energy infrastructure and El Niño-driven weather risks could turn a temporary supply-chain problem into a much longer food-price shock. In that sense, the warning illustrates what JPMorgan climate experts describe as climate acting as a “threat multiplier”, bringing separate vulnerabilities together at the same time.

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