FAO warns fertiliser delays

The Food and Agriculture Organization’s warning that Strait of Hormuz disruptions are delaying fertiliser shipments has added a new channel through which the Middle East crisis could affect inflation. The concern is not only higher fuel costs. FAO has said the delays are hitting a critical planting window, raising the risk that today’s shipping shock becomes a harvest problem later in 2026 and into 2027. In the United States, that comes as consumer inflation expectations have moved higher, a combination that could keep pressure on central banks already dealing with energy-led price gains. ### How does a shipping disruption become a food-price problem? The FAO said on May 7 that fertiliser scarcity caused by disruptions in the Strait of Hormuz would lower yields and tighten food supplies in the second half of 2026 and into 2027. Director-General Qu Dongyu said the choke point normally carries not only oil and liquefied natural gas but also “vital fertilizers,” making the disruption an agricultural as well as an energy shock. The Strait of Hormuz is one of the world’s main arteries for crop inputs because Gulf producers are major exporters of nitrogen-based fertilisers and feedstocks. FAO said tanker traffic through the strait had collapsed by more than 90% after the crisis, and warned that farmers forced to plant with fewer inputs would face weaker yields in coming months. (fao.org) ### Why are fertiliser delays so sensitive in May? May matters because planting decisions made now are hard to reverse later in the season. The FAO said “the clock is ticking” for global food systems as disruptions threaten the flow of fuel and fertilisers needed for the next planting season, while also increasing the risk of higher food prices. (fao.org) The Hindu BusinessLine reported on May 23 that the Hormuz closure had turned an energy shock into a broader food crisis, with delayed fertiliser deliveries hitting a critical planting window. That timing matters because farmers can reduce application rates when supplies are scarce, but lower usage can also cut output at harvest. (news.un.org) ### What does this have to do with U.S. inflation expectations? The University of Michigan said long-run inflation expectations rose to 3.9% in May from 3.5% in April. The survey said the reading was well above the 2.8% to 3.2% range seen in 2024, and that the increase reflected “sizable jumps” among independents and Republicans. Fortune reported on May 23 that U.S. consumers were increasingly concerned that price increases would spread beyond gasoline and persist over the long term. (thehindubusinessline.com) That is the part central bankers watch most closely: temporary oil spikes are one thing, but broader expectations can influence wage demands, pricing decisions and how households respond to future shocks. (sca.isr.umich.edu) ### Why does food matter for central banks if the shock starts with oil? Bloomberg reported on May 22 that economists had raised their U.S. inflation forecasts and pushed back expectations for the next Federal Reserve rate cut as the Iran war’s price shock spread beyond energy. Federal Reserve minutes released this week also showed officials discussing the possibility that rates might need to rise if the conflict kept inflation elevated. (sca.isr.umich.edu) Food is important because it extends the life of an inflation shock. Higher oil prices can hit quickly and then stabilize; reduced crop yields and tighter fertiliser supply can feed through later, keeping pressure on headline prices after the initial energy move fades. That sequence is an inference from FAO’s timeline for lower yields in the latter half of 2026 and into 2027, combined with the rise in U.S. inflation expectations. (bloomberg.com) ### What are investors and policymakers watching next? June 17 is the date of the Federal Reserve’s next policy decision, and incoming data on fuel, freight and food costs will shape how officials describe the inflation outlook. Markets are also watching whether shipping through Hormuz normalizes and whether fertiliser flows resume before missed deliveries affect more planting decisions. (fao.org) FAO’s own timeline points to the second half of 2026 and into 2027 as the period when lower yields and tighter food supplies would become visible. That makes upcoming crop reports, shipping data and any further FAO updates central to the next stage of the story. (fao.org) (primerates.com)