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10 September 2026 / Backgrounder
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Copy LinkGlobal agricultural markets are entering a period of heightened volatility as lower grains production, adverse weather, and Black Sea export disruptions push food prices higher. Although supplies remain substantial, historically low US wheat production, elevated farm costs, and a strengthening El Niño are increasing risks for producers, food companies, and global supply chains. Amid adverse weather and continued export disruptions in the Black Sea, world food prices have risen to their highest point since late 2022. The FAO Food Price Index (FFPI) averaged 133.3 points in August, up 2.5 points (1.9%) from July.8 A strengthening El Niño adds further uncertainty to cereal production and global supply concerns in weather-sensitive regions. Prices rise across every major grain category FAO reduced its forecast for global cereal production (covering all major grains) in 2026 slightly, bringing expected output to 2.98 billion tonnes.9 This figure is 61.1 million tonnes (2%) below the previous year and represents the largest annual decline since 2018. Nevertheless, if realized, it would still be the second largest harvest on record. However, the projected decline leaves global markets more exposed to further production losses and trade disruptions, particularly as Black Sea shipping constraints limit grain exports from Russia and Ukraine.10 The FAO Cereal Price Index averaged 116.3 points, up 2.5 points (2.2%) from July and marking its highest level since May 2024.11 Although global cereal supplies remain historically large, declining production, challenging growing conditions, and trade disruptions all reduce the market’s ability to absorb additional shocks. World wheat recorded particularly strong price growth, rising 2.6% in August month-on-month and 15% from August 2025. Persistent disruptions to Black Sea exports have constrained shipments, while extreme heat and drought have diminished production prospects across Europe. A weaker US dollar has made dollar-denominated wheat more competitive internationally, potentially supporting US exporters,12 while high fertilizer and fuel costs continue to squeeze producers.13 International maize prices rose 2.5% from July as supply concerns intensified on both sides of the Atlantic.14 Uncertain yield prospects in the US Corn Belt and prolonged heat and dryness in the European Union weakened confidence in production prospects. Meanwhile, strong livestock-feed and ethanol demand continued to draw on available supplies, while disruptions in the Strait of Hormuz provided additional support to maize prices. Other feed grains also increased in August, with sorghum prices rising 3.9% and barley increasing 2.6%. Livestock producers and biofuel processors could therefore find fewer opportunities to substitute a lower-cost grain if prices continue to increase together. Higher grain prices put US producers in a better position than they were only several months ago.15 However, elevated fertilizer and energy costs continue to constrain farm margins. Diesel prices are approximately $2 per gallon higher than a year ago, while fertilizer costs for corn planted on fields previously used for soybeans could increase by about $33 per acre. Some producers are responding by using current pricing opportunities to secure crop revenue and prepay inputs for 2027, highlighting the importance of disciplined cost and risk management as the next planting cycle approaches. USDA’s August 2026 Wheat Outlook projects US wheat ending stocks for 2026/27 at 717 million bushels (mb), down 22.07% from 2025/26.16 US wheat exports are forecast at 775 mb, nearly 15% below last year. Drought sharply reduced the Hard Red Winter (HRW) wheat crop, limiting exportable supplies and leaving US wheat less competitively priced than supplies from Russia and the EU. USDA raised the 2026/27 season-average farm price $0.20 from the previous month to $6.20, driven by tighter stocks and recent gains in futures markets. US wheat production is forecast at 1,531 mb, down 6 million from the previous month and its lowest level since 1970/71.17 Reductions in HRW and durum wheat more than offset an increase in White wheat production. The historically small crop reflects a long-term decline in US wheat acreage and widespread drought across the Great Plains. HRW wheat has experienced the sharpest pressure, with production forecasted at 463 mb, the lowest level since 1957/58. Larger inventories provide some protection, but total US wheat supplies are still expected to decline 13% from the previous year. USDA’s August 2026 World Agricultural Production report projects global wheat production for MY 2026/2027 at 819.30 million metric tons (mmt), down 2.85% from last year.18 Global wheat yielded is projected at 3.79 metric tons per hectare (t/ha), down 1.04% from last year. Total harvested area is projected at 216.09 million hectares (mha), down 1.84% from last year. European Union wheat production is forecast at 134.2 million mmt, down 8% from last year’s record.19 Harvested area is estimated at 23.7 mha, up 1% from last month but down 1% from the five-year average. Yield is forecast at 5.66 t/ha, 2% below last month and 7% below last year’s record. The EU accounts for the largest downward revision to global wheat production. Excessive heat and drought have reduced yield expectations in France, Poland, and Hungary, more than offsetting improved prospects in Romania and Bulgaria.20 USDA forecasts Brazil wheat production at 6.1 mmt, down 23% from last year.21 Harvested area is estimated at 2.1 mha, down 14% from last year. Yield is forecast at 2.90 t/ha, down 10% from last year. Brazilian industry and government sources report that low wheat prices and elevated input costs, particularly for fertilizer, are narrowing producer margins and weakening planting incentives. The developing El Niño adds further production risk for wheat farmers. USDA forecasts Russia wheat production for MY 2026/2027 at 88.50 mmt, down 1.99% from last year.22 Total wheat yield is estimated at 3.53 t/ha, 2.92% above last year’s record. Total harvested area stands at an estimated 25.10 mha, down 4.56% from last year. Meanwhile, Russian corn production is forecast at a record 17.2 mmt, up 16% from last year. Precipitation across Russia’s corn belt has remained predominantly above average since the start of the season, maintaining sufficient moisture for crop development. USDA forecasts Ukraine wheat production for MY 2026/2027 at 25.40 mmt, up 5.39% from last year.23 Total wheat yield is estimated at 4.62 t/ha, up 8.20% from last year. Total harvested area stands at an estimated 5.50 mha, down 2.65% from last year. However, logistical disruptions caused by escalations in the war continue to serve as a drag on exports.24 Russia is forecast to export 46.0 mmt of wheat for MY 2026/2027, while Ukraine is forecast to export 13.5 mmt. The strengthening El Niño – the oscillating weather phenomenon caused by warmer-than-normal ocean temperatures in the Eastern Pacific Ocean – is expected to peak between September and December 2026, but its effects on planting, production, and future harvests are expected to continue through 2027.25 Drought, flooding, and extreme temperatures are already affecting vulnerable communities, while upcoming rainy seasons will be critical for agricultural production across East and Southern Africa. However, the region is expected to face substantial risks, with an estimated 18 million people likely to be pushed into greater food insecurity, a 26% increase. Southern Africa is particularly exposed because many households depend on rain-fed subsistence agriculture. Globally, the World Food Programme estimates that El Niño-related shocks could push at least 49 million additional people into acute food insecurity by the end of 2027.26 Central America faces the largest proportional increase, with an estimated 16 million people experiencing heightened food insecurity, up 83.1%. In addition to East and Southern Africa, Asia and the Pacific region and West and Central Africa are anticipated to see significant effects. Agricultural losses in these regions could reduce export supplies, increase demand for imported cereals, and intensify food-price volatility. The effects will extend well beyond agriculture.27 A recent report by The Conference Board identifies potential disruptions across supply chains, transportation, insurance costs, infrastructure, energy, and consumer demand, with consequences for operating costs and profitability. It recommends that businesses evaluate their exposure across suppliers, customers, assets, and logistics networks and conduct scenario planning across a range of geographic and operational risks. For business leaders, early preparation will be critical to limiting disruption as El Niño reshapes agricultural markets and the broader global economy.
Trusted Insights for What’s Ahead®
Global Food Prices Rise Alongside Supply Risks
US Wheat Production Forecast at Historic Low
Global Wheat Production and Harvest
El Niño Raises Global Food Security and Economic Risks
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