JPMorgan Chase has warned of a potential global food crisis next year, with food inflation rising from 2.8% to 5%. Will food prices surge? And will this affect China?

Seeing the group chat circulating JPMorgan’s report titled ‘Food Security Is National Security,’ many people are feeling anxious. As someone working in financial risk control in New York, I’ll share how I interpret this issue from my vantage point across several dimensions. First, the conclusion: food prices will rise—but this will be a structural, not an abrupt, increase. JPMorgan forecasts that global food inflation will climb from 2.8% in the first half of 2026 to 5% in the first half of 2027—a significant jump. Yet what matters more is its persistence. The report attributes the drivers to the ‘Five Ws’: War, Weather, Warehousing, Water, and Waste. These aren’t isolated variables; rather, they form an interlocking, systemic problem. From a risk-control perspective, what worries me most is the fertilizer supply chain. Roughly one-third of global urea shipments pass through the Strait of Hormuz, and natural gas is the core raw material for nitrogen-based fertilizers. Any disruption at the Strait has already pushed fertilizer prices up by as much as 40%. Even more troubling is the 6- to 12-month lag between El Niño-related sea-surface temperature anomalies and their impact on crop yields—meaning today’s oceanic anomalies won’t translate into real production shocks until next year. When energy-driven disruptions compound with El Niño effects, food CPI could see an additional 1.5 percentage points of upward pressure. This isn’t short-term volatility—it’s multi-year, cost-push inflation. Then there’s another critical dimension rarely discussed in U.S. financial circles: the strategic positioning of the world’s top five grain traders. ADM, Bunge, Cargill, Louis Dreyfus—and either Glencore or COFCO International—this ‘ABCD+’ group now controls about 71% of global seaborne wheat trade, up sharply from 58% in 2023. They do far more than simply ‘trade grain’: they own over 65% of the world’s port-based grain silos and operate extensive private shipping fleets. In the first half of 2026, Bunge ranked as Argentina’s top grain exporter; Cargill led in corn exports (4.8 million tons), followed by COFCO International (3.8 million tons) and ADM Agro (3.6 million tons).

No wonder China has accelerated grain reserves this year! JPMorgan’s warning: A major crisis may hit in 2027.

On July 24, JPMorgan Chase released a food security research report, directly raising its global food inflation forecast for the first half of 2027 to around 5%, up from 2.8% in the first half of 2026. Led by senior global economist Nora Szentivanyi, the report summarizes risks using five ‘W’s: War, Weather, Warehousing, Water, and Waste. It sounds complex, but the core issue is starkly practical—fertilizer supplies may falter first. After February 28, escalating Middle East tensions disrupted shipping through the Strait of Hormuz. This waterway handles massive volumes of urea, ammonia, phosphate, and sulfur—Middle Eastern countries account for roughly 42% of global urea exports and 27% of ammonia exports. Following the outbreak of conflict, international research institutions observed vessel traffic through the Strait dropping by over 70% compared to pre-war levels; spot nitrogen fertilizer prices surged nearly 50% within just over ten days. Global urea prices rose from about $400 per ton at the start of the year to over $850 per ton within three months—an increase exceeding 110%. Qatar and Iran together accounted for nearly 20% of global urea trade last year; once their supply chains are disrupted, the impact quickly cascades to farms. Even more problematic is that fertilizer production capacity cannot rebound overnight. Dr. Sarah Karpnick, Head of Climate Advisory at JPMorgan, estimates it will take one to four years for damaged fertilizer plants to return to full capacity—and three to five years for associated natural gas infrastructure. Farmers may manage with reduced fertilizer applications this season, but yield shortfalls in the next planting cycle will deliver the bill—what the report calls the ‘input lag effect.’ Weather risks compound the situation. JPMorgan’s team assesses the probability of a strong El Niño forming before the end of 2026 at 81%, and its likelihood of persisting into 2027 at a striking 97%; the U.S. National Oceanic and Atmospheric Administration (NOAA) estimates the historical-level El Niño probability at 69%. Though figures differ across institutions, their directional consensus is clear: if El Niño develops, its impact on crop yields typically does not appear immediately—but emerges after six to twelve months, precisely overlapping with the 2027 H1 fertilizer supply crunch. The report estimates climate factors alone could add 0.7 percentage points to global food inflation; combined with fertilizer shocks, the total incremental impact could reach 1.3–1.5 percentage points. Commodities such as rice, sugar, coffee, and cocoa may feel the pressure first. FAO data shows grain, vegetable oil, and sugar prices have already begun rising in July 2026; Japan recorded 2,311 food items increasing in price in August—up 80% year-on-year. This doesn’t mean the world will suddenly run out of food—but for low-income households, every increment in food prices magnifies lived hardship. The USDA projects U.S. household food price inflation at approximately 2.9% in July 2027—seemingly modest, yet still translating to dozens or even hundreds of dollars added to monthly bills. China’s situation differs. Rice and wheat—the two staple grains—have long maintained self-sufficiency rates above 100%. Grain reserves can meet over a year’s worth of domestic consumption demand, and per capita grain availability has long exceeded the internationally recognized food security threshold of 400 kg. China’s national grain storage capacity totals approximately 910 million metric tons, supported by a multi-tiered safeguard system comprising central reserves, local reserves, and emergency distribution networks.

Global food inflation is expected to intensify as supply shocks pile up

17 hours ago

Global food inflation is set to accelerate through 2027 amid war-driven shipping disruptions and El Nino droughts squeezing cereal supplies. The FAO Food Price Index hit record highs, raising risks of social unrest and increasing costs for major food processors globally.

reuters

2026-09-04

World food prices at highest since 2022 as supply risks mount, FAO says

2026-10-18

Global food inflation is expected to intensify as supply shocks pile up

Global food inflation is expected to intensify as supply shocks pile up

FAQ