The combined risks of chemical fertilizers and extreme weather: potential disruptions to crop supply in the 2027 planting season (Barclays)
Barclays released a sustainable investment report, pointing out that global agriculture faces dual risks from fertilizer market disruptions and a potential super strong El Niño.
Barclays released a sustainable investment report, pointing out that global agriculture faces dual risks from fertilizer market disruptions and a potential super strong El Niño. The combination of the two will increase the risk of crop yields in the 2027 planting season. The assessment framework shows that cocoa, coffee, and rice are the crops with the highest exposure, and sub-Saharan Africa and Southeast Asia are risk hotspots. Bottom line: The combination of fertilizers and weather is creating new systemic risks in agriculture, with potential shocks to supply chains that rely on imports of specific crops and emerging markets. Positive/negative: Positive for fertilizer manufacturers, agricultural insurance, and cocoa and coffee prices. It is negative for the economies and currencies of emerging market-related countries. The market may be under-pricing this long-term structural risk. Catalysts: 1) Forecast and confirmation of El Niño; 2) Monthly fertilizer price and supply data; 3) Reports on weather conditions in major crop producing areas.