United Nations warns of a food crisis while others remain un

The world has enough food supplies for now, but blockaded crop inputs at the Strait of Hormuz may lower future yields.

SASKATOON -- A leading U.S. grain market analyst does not put much stock in reports of a looming food crisis due to the war in Iran.

The United Nations is one of the groups issuing the dire warnings.

"The clock is ticking for global food systems as disruptions in the Strait of Hormuz threaten to choke off the flow of fuel and crucial fertilizers needed for the next planting season," the UN stated in a recent article on its website.

That raises the risk of higher food prices and a new wave of inflation, it said.

UN chief economist Maximo Torero said 30 to 35 per cent of the world's crude oil, 20 per cent of its natural gas and 20 to 30 per cent of its fertilizer are not moving out of the Middle East.

Much of the cargo that left the Persian Gulf before the war has already reached its destination, and the world is now entering a phase where supplies could start to tighten.

Strait of Hormuz

The Food and Agriculture Organization's Food Price Index for March showed only modest increases.

"We have enough supplies and good stocks which allow the agri-food system to be resilient to this shock," said Torero.

However, he warned that the buffer may be short-lived as farmers around the world reduce input use or shift crops.

That would result in lower yields, which will drive up food prices later in the year and into next year, he said.

Higher oil prices are also diverting crops such as corn, sugar and oilseeds toward biofuel production.

"If we have rising demand because biofuels start to consume more, and lower supply because we have less inputs, food prices will go up," said David Laborde, director of the agrifood economics division of the Food and Agriculture Organization of the UN.

Arlan Suderman, chief commodities economist for StoneX, agreed that the war is having a profound impact on fertilizer prices, but not to the degree of when Russia invaded Ukraine in 2022.

Price Index for March

Fertilizer manufacturers are raising prices to ration demand.

"The lower income countries are going to have the most difficulty affording fertilizer," he said during a recent webinar.

StoneX analyst Arlan Suderman says fertilizer prices are up sharply, but not to the extent that they were when Russia invaded Ukraine in 2022. The United Nations worries this could lead to a food crisis. Source: StoneX

Suderman believes wheat will be the crop most affected by rising input costs because it has the narrowest profit margins of the major crops.

However, fertilizer was already in position for farmers in the Northern Hemisphere, so he doubts there will be a big profitability impact for those growers.

"What we'll be watching is going to be Argentina wheat areas and Australian wheat areas," he said.

However, Suderman does not believe a food crisis is looming because of ample supplies of all the major crops.

Arlan Suderman

For instance, ending stocks of wheat for the major exporters in 2025-26 is forecast to be at the highest level since 2010 with a stocks-to-use ratio of nearly 30 per cent.

"It is pretty significant supplies," he said.

The UN worries that those global stocks could dwindle if the emerging El Nino weather pattern takes a toll on production in key production regions like Australia.

It is also concerned that rising input costs and uncertainty are squeezing farmer margins.

"When you push them too much, you may bring them into bankruptcy," said Laborde.

"And then it means there will be a supply problem for a longer period."

The FAO said a full-blown food crisis is not inevitable, but the window to prevent one is rapidly closing.

El Nino

It is encouraging governments around the world to avoid trade restrictions, support vulnerable households through social programs and ensure liquidity for farmers through credit lines and import financing.

About the author

Sean Pratt Reporter/Analyst

Sean Pratt has been working at The Western Producer since 1993 after graduating from the University of Regina's School of Journalism. Sean also has a Bachelor of Commerce degree from the University of Saskatchewan and worked in a bank for a few years before switching careers. Sean primarily writes markets and policy stories about the grain industry and has attended more than 100 conferences over the past three decades. He has received awards from the Canadian Farm Writers Federation, North American Agricultural Journalists and the American Agricultural Editors Association.

Related Coverage

Phosphate prices not soaring as much as urea

Why canola yields may be stuck near 40 bu./ac. on the Prairies

U.S. acreage estimates show corn down, soybeans up

China's hog surplus, plunging prices muddy tariff solution

Resilience urged for Canadian supply chain

Pricier diesel to increase grain movement costs

The clock is ticking for global food systems as disruptions in the Strait of Hormuz threaten to choke off the flow of fuel and crucial fertilizers needed for the next planting season.

Why this lands now

Food-industry announcements tend to arrive in waves: a launch, a reaction, then a revision once the public has its say. Read in sequence rather than in isolation, they usually say more about where the market is heading than any single statement does.

At a glance

The world has enough food supplies for now, but blockaded crop inputs at the Strait of Hormuz may lower future yields
SASKATOON -- A leading U.S. grain market analyst does not put much stock in reports of a looming food crisis due to the war in Iran
The United Nations is one of the groups issuing the dire warnings
UN chief economist Maximo Torero said 30 to 35 per cent of the world's crude oil, 20 per cent of its natural gas and 20 to 30 per cent of its fertilizer are not moving out of the Middle East
Much of the cargo that left the Persian Gulf before the war has already reached its destination

By the numbers

StoneX analyst Arlan Suderman says fertilizer prices are up sharply, but not to the extent that they were when Russia invaded Ukraine in 2022
Sean Pratt has been working at The Western Producer since 1993 after graduating from the University of Regina's School of Journalism

The questions it raises

What should you know about Strait of Hormuz?