Food Prices Climb As Conflicts And El Niño Tighten Grain Supplies
By John Baffes, Dawit Mekonnen and Kaltrina Temaj
Global grain supplies are set to shrink for the first time in four years. According to the US Department of Agriculture's November update, global grain supply, including production and beginning stocks, is projected to fall by about 20 million metric tons (mmt) in 2026–27. Even so, supplies would remain the second highest on record, limiting upward pressure on prices. Wheat faces the strongest headwinds, with global output projected to decline by 2 percent. US output is projected to drop by 23 percent to its lowest since 1970–71, and Ukraine's exports are expected to fall by 18 percent. Global maize and rice production are also expected to decline, by 3 and 2 percent, respectively, with rice posting its first drop in a decade as El Niño weighs on Asian harvests.
Edible oil supply growth is slowing just as biofuel demand surges. Global edible oil supply is projected to grow by 2.7 mmt in 2026–27, well below the long-term average annual increase of 5.7 mmt, partly because of the ongoing very strong El Niño. Meanwhile, demand for soybean and palm oil as biofuel feedstocks continues to rise, supported by elevated energy prices, record US biofuel volume requirements, and Indonesia's increase in the palm oil share of biodiesel blends from 40 to 50 percent. The World Bank Group's oils and meals index changed little in 2026Q3 (q/q) but was still 17 percent higher than a year earlier.
Declining global inventories leave markets more exposed to shocks. The global stocks-to-use ratio for maize (a measure of inventories relative to consumption) is projected to fall to 21.5 percent in 2026–27, its lowest level since 2012–13, though still well above its 2010–11 low of 13.2 percent. Ratios for wheat and rice are expected to edge down to 34 and 37.2 percent, respectively, while the ratio for edible oils is set to fall to 12.5 percent, its lowest since 2009–10. These tight buffers could amplify the price effect of weather or trade shocks.
Food price inflation is picking up, threatening recent gains against hunger. Median food price inflation in emerging market and developing economies (EMDEs) rose to 3.9 percent (y/y) in 2026Q3 from 3.5 percent in 2026Q2. It reached 7.4 percent in the World Bank's Middle East, North Africa , Afghanistan, and Pakistan region, and reached 122 percent in the Islamic Republic of Iran. Meanwhile, severe food insecurity fell from 837 million people in 2021 to 779 million people in 2025, aided by a 21 percent drop in global food commodity prices during this period. With prices projected to rise a cumulative 18 percent in 2026–27, that tailwind is set to become a headwind.
Food prices are set to keep rising, with risks tilted to the upside. The World Bank Group's food price index is projected to rise by 10 percent in 2026 and 7 percent in 2027, before easing by 5 percent in 2028. Grains are forecast to rise by 14 and 9 percent and oils and meals by 17 and 8 percent in 2026 and 2027, respectively . Prices for other food items are expected to remain broadly stable in 2026 and edge up in 2027. Risks remain tilted to the upside: stronger-than-expected effects of El Niño, prolonged Black Sea hostilities, export restrictions, higher energy prices, and stronger biofuel demand. Under a scenario of prolonged conflicts and stronger El Niño effects, the food price index would exceed the 2027 baseline by 12 percent and would also surpass its 2022 level.
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