Food prices are surging as Russia and Ukraine continue striking infrastructure in the Black Sea region, adding pressure to wheat prices and deepening global food security concerns. According to Sina Finance, analysts warned that farmers may plant fewer crops this winter because of pressure on profits and financing, which could threaten next year's food supply.

Extreme weather is also adding uncertainty, including extreme heat, unusually heavy rain, and the approaching El Nino weather event. Russia and Ukraine have continued attacking each other's port infrastructure, disrupting grain exports from the so-called breadbasket of Europe and weighing on global food supplies.

According to estimates, the two countries account for about one-quarter of global grain exports. Customs data showed that their combined grain exports totaled nearly 100 million tons in the 12 months through June. Since Russia's full-scale conflict began in 2022, grain shipments have largely continued thanks to diplomatic agreements aimed at safeguarding global food supplies.

Recent attacks on grain export facilities, tankers, and other vessels in the Black Sea have made it difficult for shipping companies to insure related business, prompting many to avoid Black Sea ports. Ukraine's overland export alternatives are also constrained, with low water levels on the Danube and rail maintenance in Eastern Europe slowing transport.

Disruptions are not limited to the Black Sea conflict. Shipping bottlenecks in the Strait of Hormuz, as well as low water levels on the Rhine and Danube rivers, are also weighing on transport. These persistent shipping constraints are pushing up prices for fertilizers and other agriculture-related commodities, adding to pressure on farm production.

According to Sina Finance, CoBank chief economist Jacqui Fatka wrote in a report last week that fertilizer prices have become a structural problem and may persist for a long time because of tight supplies of key chemical inputs linked to the Middle East conflict. She said U.S. farmers know that cutting fertilizer use to reduce input costs could hurt crop yields and ultimately cause losses greater than the fertilizer price increases themselves, but other yield-preserving measures have already been exhausted. Fatka added that farm cash flow is tight and some growers cannot lock in production supplies for the next crop cycle until they secure additional loans or working capital.

Trade and agriculture analyst Noel Fryer said European farmers also face concerns, with profitability worries and financing difficulties likely to sharply reduce planting intentions this winter in Russia, Ukraine, and other regions. He said multiple problems are piling up and will severely hit crop output next year. Fryer also said crops in Europe and the United States have already been badly damaged by extreme weather, while Europe's scorching summer has degraded grasslands and left cattle and sheep short of hay and pasture, which could trigger large-scale livestock slaughter.

He added that the Black Sea crisis shows no sign of resolution, fertilizer supply problems since the Iran conflict began remain unresolved and are worsening, and a wet U.S. spring combined with reduced fertilizer application has clouded the outlook for corn output and could lift corn prices. Fryer said a strong El Nino is also approaching and will add major uncertainty, increasing market volatility in the Southern Hemisphere. He concluded that the overlapping problems create a highly uncertain outcome and amount to a perfect storm.