“While global food commodity markets are generally resilient, rising cereal prices underscore the vulnerability to risks from weather and disruptions in energy markets. Uncertainty over key trade routes, in particular the Strait of Hormuz, could reduce fertilizer use and increase pressure on prices, underscoring the need for coordinated international action,” said Bubaker Ben-Belhassen, Director of FAO’s Markets and Trade Division.
This view comes after last week’s FAO Food Price Index report for May. The index averaged 130.8 points, down 0.2 percent from April but 2.9 percent above year-ago levels, Logos Press previously wrote.
Risks of “systemic shock”
Analysts at Bloomberg assess the situation even less optimistically. They forecast a “systemic agri-food shock” without echoing the political correctness typical of UN organizations. The agency sees the war in Iran as a “financial weapon” that has paralyzed logistics and catalyzed a future crisis. They identify four main causes of the coming shock.
Effects of the blockade. The war with Iran has stopped the flow of fuel and fertilizer through the Strait of Hormuz, dramatically raising the cost of growing rice, corn and other products. The blockade is the beginning of a crisis whose effects will manifest themselves within 6-12 months. Expert Tim Benton notes that today’s rise in fertilizer prices is a “slow effect” that will hit crops and store prices closer to the end of 2026 and in 2027.
Logistical paralysis. Bloomberg clearly highlights the “frozen assets” mechanism at sea. Hundreds of supertankers and cargo ships are anchored. This creates a shortage of resources without a formal sanctions order. Paralysis is squeezing global trade.
Inflationary pressures. Manufacturers in Europe and Britain are preparing for sharp price increases. According to Rabobank, the cost of goods will hit consumers’ wallets hard by Christmas. More than 80% of manufacturers in the UK are already planning to raise prices. Tim Benton adds: the next year and a half will be crucial for food price inflation.
Natural factor. Adding to the logistical problems is the threat of a “super” El Niño. This weather phenomenon will trigger catastrophic conditions and destroy crops, which will exhaust the world’s grain reserves.
