The World Bank just released its newest report, basically saying food prices are now parked at the highest level since January 2024. And yeah, the rise came right after that kind of virtual shutdown of the Strait of Hormuz, following the conflict in the Middle East in late February.
Food prices rose by 5 percent in the first two months after the conflict started than they did during the previous two months. This increase was largely due to a 10% increase in oils and meals, as the increased biofuel mandates and higher crude oil prices published by agencies such as the International Energy Agency (IEA) drove the rise.
Grain prices were 3% higher during the same period, a more modest figure. A year-on-year comparison of food prices through April indicates that they were overall 2% higher in the world.
A Muted Market Shock Amid Rising Fertilizer Costs
Yet, the price reaction has been relatively mild, compared with the 15% price increase that was observed at the beginning of 2022, according to organisations such as the Food and Agriculture Organisation (FAO). The reduced impact is due in part to the fact that northern hemisphere farmers have obtained their spring fertilizer supplies before the Middle East conflict started.
Moreover, the current economic shock is not much about a sudden shock to key food exports, but rather higher input costs. In reality, the forecast for 2025–26 is for even higher global stocks this year, driven by the strong prospects for favorable weather. The forecast for 2025–26 is for even higher stocks this year globally, supported by strong weather prospects.
Production in 2026–27 is forecast to decline slightly but remain the second largest ever, consistent with other monitoring efforts, such as those of the United States Department of Agriculture (USDA). Despite those buffers, grain prices sorta jumped 5% in the first quarter of 2026, mostly because wheat rose 9% and maize climbed 4%.
Now, things are much more prickly in the fertilizer industry, though. The fertilizer price index went up by more than 12% in Q1 2026, ending at the very top rate since 2022, with March prices taken into account. This bump, especially for urea, is mostly tied to the closure of the Strait of Hormuz on key export routes, so supply chains get squeezed, and costs start to creep.
Ahead, the fertilizer index will more than double in 2026 as demand remains strong and input prices for nitrogen and phosphates are high. However, with the world getting back to normal in 2027, prices are expected to go down in that year, but there are warnings that if energy prices rise or shipping volumes become disrupted, the risk may be strongly on the upside.
