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FAO's cereal index climbs 17.2% in a year despite a near-record grain harvest

FAO's September food price index rose to 136.0, its highest since November 2022, while its cereal index climbed 17.2% from a year earlier. With Gulf urea supply cut and El Nino's harvest boost due to fade, the larger cost risk sits with next year's planting.

The Investor · Invest desk

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Illustration accompanying FAO's cereal index climbs 17.2% in a year despite a near-record grain harvest
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What happened

  • The FAO still forecasts this year's global grain output at 2.979 billion tonnes, the second-largest harvest on record.
  • Urea exports from countries that depend on the Strait of Hormuz fell 83% in April from a year earlier, the International Trade Centre found, and other suppliers did not make up the gap.
  • Wheat futures are up 35.06% so far this year and corn futures 13.91%.
  • Columbia University's climate institute expects the El Nino warming in the eastern Pacific to peak between October and January, then decline.

Why it matters

  • cost Farmers buying urea for planting in the first half of 2027 pay this year's higher prices, and that bill falls on a crop grown after the El Nino rains that held down 2026 grain prices have passed.
  • exposure Low-income countries face the most risk, since analysts warn that unstable fertilizer supply during next spring's planting could deepen food crises there.
  • constraint Aramco chief Amin Nasser puts the catch-up on demand and inventories at up to two years even after a full Hormuz reopening, so gas-linked fertilizer costs are unlikely to return to normal before 2027 planting.
  • decision Grain hedges put on in January have already captured the 2026 move, so a position opened now is a bet on fertilizer costs feeding into the 2027 crop.

Strip out cereals and September looks milder than its four-year-high label. The full index sits 15.1% below the 160.2 it reached in March 2022 [2][22] and rose 5.8% in a year [1]. Cereals rose about three times as fast [27]. Working back from the FAO's percentages, the cereal index stood near 104.8 a year ago and 116.8 in August [23], so the annual move is, more precisely, a recent one: about 6 of its 18 points came in September alone [24].

Crop size does not explain it. The FAO expects grain trade for 2026/27 to fall 3.5% to 505.8 million tonnes [7] in a near-record harvest year [6]. The world is growing nearly as much grain as it ever has and moving less of it across borders. The agency blamed Hormuz shipping disruption since the U.S.-Iran war began in late February, plus Black Sea logistics and climate shocks, for lifting energy, transport and farm prices at once [4]. Soybeans followed the war's calendar. November futures in Chicago dropped to the low 1,100-cent range after a June memorandum on ending hostilities, then topped 1,300 cents in mid-September once it expired and fighting resumed [9]. They closed at 1,297.50 cents on October 7 [8].

Fertilizer carries the case for next year. The Middle East supplies about 34% of world urea trade, according to Argus Media [11]. If the Hormuz-dependent exporters in the International Trade Centre's April figure roughly match that group (they are not the same list), April's fall removed about 28% of world urea trade [12][25]. Grain prices this year were held down by weather: a super El Nino brought rain and big harvests to the central United States, southwestern Brazil and Argentina [14]. If the warming fades as forecast, Daishin Securities analyst Choi Jin-young said, the factor restraining grain prices will disappear and rising gas and fertilizer prices could feed through to grain [15][16]. The weather effect is uneven, too. The FAO's sugar index rose 6.1% in September on El Nino drought risk in India, Southeast Asia and Australia [17].

We think cereal costs climb further into the first half of 2027, when farmers plant with fertilizer bought from a short urea market [28]. The counter-thesis comes from the World Bank, which expects urea prices to fall in 2027 if Middle East exports recover and natural gas stabilises [19]. Weather forecasts diverge as well. The European Centre for Medium-Range Weather Forecasts has raised the possibility of a La Nina in the second half of 2027 [18]. The test comes before spring planting: if urea prices fall while the Strait is still disrupted, alternative supply has filled the gap the ITC measured and the input-cost case is wrong [12].

Energy argues against a quick reversal. Middle East crude exports excluding Iran averaged 16.5 million barrels a day in September, 87% of prewar levels [20], implying a prewar rate near 19 million and a shortfall of about 2.5 million barrels a day [26]. Damaged refineries and higher insurance premiums keep costs elevated on the oil that does move [20]. FAO chief economist Maximo Torero said consumer food prices would soon reflect these pressures if they persist [5].

What to watch

  • ITC and trade data on Hormuz-dependent urea exports, the first sign of whether Gulf supply is returning before spring planting.
  • The FAO's October cereal index, and whether it adds to September's 5.1% monthly gain.
  • Whether eastern Pacific warming actually peaks and declines between October and January, as Columbia's climate institute expects.

Clarity's read

What the record supports and how the coverage leans. The claims behind it follow.

Reality

Evidence55
Adoption
Insufficient
Hype gap+20
Incentives
Insufficient
Confidence50
Why these scores

Claim ledger

Ranked by verification strength, evidence, and original report placement.

  1. [1]

    The FAO's September food price index reached 136.0, up 1.5% from 134.0 the previous month and 5.8% from a year earlier.

    ReportedSupportedView cited source
  2. [2]

    The September index is the highest since November 2022, when it also stood at 136.0, but remains below the peak of 160.2 recorded in March 2022, shortly after Russia's invasion of Ukraine.

    ReportedSupportedView cited source
  3. [3]

    The FAO cereal price index climbed to 122.8 in September, up 5.1% in a month and 17.2% from a year earlier.

    ReportedSupportedView cited source

Sources

1 independent publisher whose own reporting we read for this story.

  1. en.sedaily.com

    1 article · October 10, 2026

    Grain Prices Set to Bite Harder Next Year as Fertilizer Crunch Builds

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