Global Food Prices Projected to Rise Amid Supply Shortfalls

Oxford Economics projects global food prices will rise by 11.8% in 2026 and 4.8% in 2027, driven by extreme heat, drought, and conflicts in Ukraine and the Middle East. Cereals, dairy, fruits, and vegetables are expected to be most affected, with wheat prices potentially increasing 36% year-over-year to $0.92 per bushel in the third quarter of 2026.

Supply pressures are intensifying as the United States Department of Agriculture forecasts that global grain production will fall below consumption in 2026/27, the largest shortfall since 2006/07. The European Grains and Oilseeds Trade Association Coceral has already lowered its harvest forecast for the European Union and United Kingdom to 286.6 million metric tons. Analysts from HSBC and JPMorgan warn of a looming crisis, noting that the escalation of the Russia-Ukraine war and the closure of the Strait of Hormuz have constrained shipments of wheat, fertilizer, and sulphur.

Environmental factors including Northern Hemisphere heatwaves, a strengthening El Niño, and a positive Indian Ocean Dipole have further reduced crop yields and spiked prices for coffee and cocoa. These stressors are compounded by a 36% year-over-year increase in global diesel prices as of July and a projected 22% rise in fertilizer costs for 2026. HSBC economist Jamie Culling noted that while previous stocks helped stabilize prices, those buffers are now depleting rapidly.