J.P. Morgan projects global food inflation to near 5% by early 2027
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J.P. Morgan Global Research projects global food inflation could rise from 2.8% to about 5% by early 2027. The bank warns a supply disruption in nitrogen fertilizer, a third of which moves through the Strait of Hormuz, could drive the increase. The report notes there are no strategic fertilizer reserves comparable to oil reserves, leaving markets more vulnerable to shock.
Key Facts
- J.P. Morgan Global Research projects global food inflation could rise from 2.8% to about 5% by early 2027.
- About one-third of the world's nitrogen fertilizer is transported through the Strait of Hormuz.
- Nitrogen fertilizer is used in the production of about half of the world's crops.
- The report says there are no large-scale strategic reserves for fertilizer, unlike oil markets.
Fertilizer Supply Risk
J.P. Morgan Global Research warns that a disruption in nitrogen fertilizer supply could trigger a global food supply crisis next year. About one-third of the world's nitrogen fertilizer is transported through the Strait of Hormuz, a critical energy and trade chokepoint. A disruption to shipping through the strait could severely affect fertilizer shipments and raise agricultural production costs. Unlike oil markets, there are no large-scale strategic reserves for fertilizer, leaving markets more vulnerable to a supply shock.
Impact on Food Prices
Nitrogen fertilizer is used in the production of about half of the world's crops. A serious contraction in fertilizer supply could affect not only farmers' costs but also food supply and consumer prices directly. If J.P. Morgan's projection materializes, global food inflation would rise to about 5% by early 2027. The report's scenario indicates that geopolitical tensions in energy transport could affect fertilizer and food prices, not just oil prices.
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