Global Food Markets Face Growing Geopolitical and Climate Risks Despite Strong Supply Outlook
Global food commodity markets are expected to remain relatively stable over the coming year, supported by strong cereal stocks and historically high production levels. However, mounting geopolitical tensions, climate-related uncertainties and volatility in energy and fertilizer markets continue to pose significant risks to global food security, the Food and Agriculture Organization of the United Nations (FAO) has warned.
In its latest Food Outlook report released on Thursday, FAO said global cereal production is projected to remain at elevated levels in the 2026/27 season, although output is expected to decline from recent record highs.
The report notes that the outlook remains highly dependent on weather conditions, particularly the possible emergence of El Niño, as well as conflicts affecting energy and fertilizer markets, shifting trade policies and broader economic challenges.
“Agrifood systems appear robust at a production level, but risks are growing and many of them have the potential to have rapid and adverse effects for global supply and access,” said FAO Chief Economist Maximo Torero.
“We need to double down on resilience by keeping trade flows open and supply chains functioning, while preparing for local weather shocks,” he added.
According to FAO, global cereal output is forecast to decline by 2 percent in 2026 to 2.98 billion tonnes. Despite the drop, production levels will remain historically high and supported by ample carryover stocks.
Meanwhile, cereal utilization is expected to continue growing, with food consumption increasing by 1 percent. However, per capita cereal consumption in Low-Income Food-Deficit Countries is projected to fall slightly by 0.4 percent.
FAO projects global wheat production for the 2026/27 season to fall by 3.8 percent to 810.9 million tonnes. The decline is mainly attributed to reduced harvests among major exporters, including Australia, the European Union and the United States, where output is expected to decrease by more than 21 percent.
Production of coarse grains is also expected to fall by 1.2 percent to 1.62 billion tonnes due to lower planting areas and weaker yields in North America. However, South America is expected to offset part of the decline, with strong maize production forecasts, particularly in Argentina.
In contrast, global soybean production is projected to reach a record 432.3 million tonnes in 2025/26. Continued expansion in Brazil and Russia is expected to outweigh lower output in Argentina, India and North America.
The report forecasts global meat production to rise by 1 percent to 391.3 million tonnes in 2026, driven largely by a 2.5 percent increase in poultry production. Bovine meat production, however, is expected to decline.
Global fisheries and aquaculture production is also anticipated to expand by 1 percent, reaching 200.5 million tonnes. Aquaculture output is forecast to grow by 2.9 percent, led by increased production of shrimp, salmon and carp.
At the same time, global vegetable oil consumption is expected to exceed production during the 2025/26 season, resulting in tighter market conditions and a third consecutive decline in ending stocks.
Concerns Over Fertilizer Markets and Shipping Costs
FAO also highlighted growing concerns in fertilizer markets. Global fertilizer trade volumes fell by between 20 and 25 percent during the first four months of 2026 compared with the same period in 2025.
Although fertilizer prices have eased somewhat in recent months, uncertainty remains ahead of the 2026/27 agricultural season. The report points to stalled purchases in major markets such as Europe and North America, especially for nitrogen and phosphate fertilizers.
Market conditions remain particularly sensitive to developments affecting shipping routes through the Strait of Hormuz, a key transit corridor for global fertilizer supplies.
The report further examines the impact of international efforts to reduce greenhouse gas emissions from maritime transport. FAO notes that the shift toward alternative shipping fuels could have important consequences for agricultural trade, particularly for Small Island Developing States (SIDS), which depend heavily on imported food.
Global Food Import Bill Reaches New Record
FAO estimates that the global food import bill rose by 7.9 percent in 2025 to a record USD 2.22 trillion.
The increase occurred despite lower import costs for cereals, sugar and oilseeds. Instead, the surge was driven by higher prices for coffee, cocoa, spices, animal products, fish, fruits and vegetables, commodities largely imported by high-income countries.
Food import spending by high-income countries increased by 9.3 percent and accounted for more than two-thirds of global food import expenditures. Upper-middle-income countries recorded a 4 percent increase, while lower-middle-income and low-income countries saw increases of 7.9 percent and 6.7 percent respectively.
FAO warned that geopolitical instability could further increase food import costs. Previous analyses by the organization found that under conditions of high geopolitical risk, the impact of oil price shocks on food import bills can nearly double due to higher insurance costs, logistical disruptions and increased market uncertainty.
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