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Why Conflict, Energy Shocks and Drought Could Keep Food Prices High
The immediate danger is a prolonged, uneven food affordability crisis rather than an unavoidable worldwide shortage: conflict can raise fuel, freight and fertilizer costs just as drought reduces harvests. The USDA forecasts 2026/27 U.S.
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Key takeaways
- The immediate danger is a prolonged, uneven food affordability crisis rather than an unavoidable worldwide shortage: conflict can raise fuel, freight and fertilizer costs just as drought reduces harvests.
- The USDA forecasts 2026/27 U.S. wheat production at 1.531 billion bushels—the lowest level since 1970/71—while Australia expects winter crop output to fall 21% to 54.5 million tonnes.
- A prolonged Hormuz disruption could push up energy and fertilizer costs, while export restrictions and bilateral purchasing deals make food markets thinner and less accessible to poorer buyers.
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openai.comCreate a landscape editorial hero image for this Studio Global article: How are the convergence of military conflicts—including disruptions to Black Sea shipping, the prolonged closure of the Strait of Hormuz aft. Article summary: These shocks can reinforce one another into a food-price and food-access crisis: smaller grain harvests reduce exportable supply just as conflict and expensive fuel, shipping, and fertilizer make moving and producing foo. Topic tags: general, general web, user generated, government, news. Style: premium digital editorial illustration, source-backed research mood, clean composition, high detail, modern web publication hero. Use reference image context only for broad subject, composition, and topical grounding; do not copy the exact image. Avoid: logos, brand marks, copyrighted characters, real person likenesses, fake screenshots, UI text, readable text, watermar
Several shocks are converging on the same food system: military conflict can disrupt energy and shipping, drought can reduce harvests, and expensive fuel and fertilizer can make the next planting season weaker. Together, they create a feedback loop in which food becomes more expensive to produce, transport and buy.
The central risk is not necessarily an immediate physical shortage everywhere. It is a prolonged and uneven affordability crisis, concentrated in countries that depend heavily on imports, have weak currencies or lack efficient inland transport.
The supply shock is real—but not uniform
The United States is entering the 2026/27 marketing year with a projected all-wheat harvest of 1.531 billion bushels, the lowest forecast since 1970/71. The U.S. Department of Agriculture attributes the smaller crop partly to drought in the Great Plains and to a longer-term decline in wheat acreage. 17
Australia is also expected to produce less. The June 2026 ABARES outlook forecasts national winter-crop production of 54.5 million tonnes in 2026/27, down 21% from the previous season. However, the forecast remains 4% above the 10-year average and would be the country’s seventh-largest winter crop on record. 5
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That distinction matters. A weaker harvest does not automatically mean a global famine. It does mean less room for error if another major exporter suffers weather damage or if shipping routes become more expensive or dangerous.
Why energy shocks become food shocks
Food production uses energy at nearly every stage: planting, irrigation, harvesting, drying, milling, refrigeration and trucking. A disruption to oil shipments can therefore reach consumers through much more than the price of petrol.
The Strait of Hormuz is especially important because disruption there can rapidly increase crude-oil and petroleum-product prices as buyers compete for alternative supplies and inventories are drawn down. Congressional Research Service analysis also identifies effects on chemical fertilizer production, including nitrogen- and phosphorus-based fertilizers. 49
The Food and Agriculture Organization has warned that disruptions to fuel, natural gas and fertilizer flows could threaten the next planting season, increasing the chance that a short-term logistics shock becomes a later harvest shock. 63
Fertilizer is the critical second-order risk. If prices become prohibitive or supplies are delayed, farmers may reduce application rates. That can lower yields in a later season, extending the crisis beyond the original conflict or shipping disruption.
Weather can synchronize otherwise separate risks
Drought and heat reduce yields directly, but they can also disrupt logistics. Low water levels restrict barges and inland shipping, forcing grain and fertilizer onto costlier routes. Heat can damage crops near harvest, while poor soil moisture can reduce planting or limit yield potential.
A prolonged and unusually intense El Niño could add another layer of risk by increasing the probability of damaging weather in several agricultural regions. But claims about a “super El Niño” lasting through 2027 should be treated as a scenario, not a settled forecast. Its eventual effect would depend on how the event develops and on regional weather patterns.
The danger comes from correlation. One drought is manageable; several major production regions experiencing losses while energy and freight costs are elevated is much harder for markets and governments to absorb.
Trade fragmentation can make food more expensive even when grain exists
When governments fear shortages, they may restrict exports, build stocks or arrange preferential bilateral deals. Those steps can protect a particular country’s supply in the short term, but they can also reduce the volume available on open markets.
The result is a more fragmented system. Countries with foreign-exchange reserves, storage capacity, domestic production or strong diplomatic leverage can secure supplies more easily. Import-dependent and landlocked countries face a harsher chain of costs: rerouting, border delays, inland freight and insurance all raise the delivered price.
This is why benchmark commodity prices do not always describe what vulnerable households pay. The global market may appear to be functioning while specific countries face severe local price increases or shortages.
Inflation: central banks can contain demand, not grow wheat
Food and energy shocks lift headline inflation directly. If they persist, they can also influence wage demands, business costs and inflation expectations.
Higher interest rates cannot reopen a shipping lane, restore a failed harvest or manufacture fertilizer. Central banks therefore face a difficult trade-off: tightening policy may suppress demand and prevent a temporary supply shock from becoming embedded, but it cannot remove the original cause of the price increase. Policymakers must distinguish between a one-off jump and a sustained second-round inflation process.
That makes the duration of the disruption more important than any single day’s commodity-price move. If energy, freight and food costs normalize quickly, inflation pressure may fade. If fertilizer shortages affect the next planting cycle, the shock can last much longer.
Hunger can worsen even while global indicators improve
The latest global assessment offers both progress and a warning. The prevalence of undernourishment fell to 7.8% of the world’s population—about 645 million people—in 2025, down from 8.1% in 2024. 33
That progress remains uneven. Reuters, reporting on the same assessment, said Africa accounted for about 309 million undernourished people in 2025, roughly one in five residents, and highlighted the risks posed by climate shocks, trade disruption and possible Hormuz-related energy pressures. 35
A food crisis often begins as an affordability problem rather than an absence of food. Households may buy less nutritious staples, reduce meal frequency or sell productive assets before national famine indicators deteriorate. Import bills can also rise just as governments have less fiscal space to fund subsidies, school meals or humanitarian deliveries.
What would reduce the risk?
The most effective buffers are practical rather than monetary:
- Keep food, fuel and fertilizer trade corridors open wherever possible.
- Avoid broad export restrictions that remove supplies from international markets.
- Finance imports and targeted safety nets for the most exposed countries.
- Improve storage, irrigation, seeds and local production before the next planting season.
- Preserve alternative transport routes so that one maritime chokepoint does not determine delivered food prices.
- Monitor fertilizer availability as an early warning for next-season harvest risk.
The key lesson is that food security depends on more than the size of a harvest. It also depends on whether fuel is affordable, fertilizer arrives on time, ships can move safely and poorer buyers can access foreign currency. When those systems fail simultaneously, a manageable supply shock can become a prolonged inflation and hunger crisis.
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What is the short answer to "Why Conflict, Energy Shocks and Drought Could Keep Food Prices High"?
The immediate danger is a prolonged, uneven food affordability crisis rather than an unavoidable worldwide shortage: conflict can raise fuel, freight and fertilizer costs just as drought reduces harvests.
What are the key points to validate first?
The immediate danger is a prolonged, uneven food affordability crisis rather than an unavoidable worldwide shortage: conflict can raise fuel, freight and fertilizer costs just as drought reduces harvests. The USDA forecasts 2026/27 U.S. wheat production at 1.531 billion bushels—the lowest level since 1970/71—while Australia expects winter crop output to fall 21% to 54.5 million tonnes.
What should I do next in practice?
A prolonged Hormuz disruption could push up energy and fertilizer costs, while export restrictions and bilateral purchasing deals make food markets thinner and less accessible to poorer buyers.