📝 Fertilisier Prices to Feed Into Higher Global Food Inflation: Nordea

Fertiliser production is also highly energy-intensive and closely linked to natural gas prices. Higher energy costs have therefore amplified existing supply disruptions. Several fertiliser producers across both the Middle East and South Asia have either reduced or halted production entirely. India has reportedly instructed fertiliser producers to cut natural gas consumption to around 70% of normal levels due to supply shortages. Fertiliser prices have already started to rise materially, and it is likely only a matter of time before this feeds through into higher global food inflation.

Even if the Strait of Hormuz reopens in the near future, inflationary pressures across Western economies could remain elevated for a prolonged period. Tight oil inventories imply there is still an upside risk to oil prices before markets eventually begin to normalise. Rising plastics and petrochemical prices are likely to feed into higher producer prices and goods inflation over the coming quarters. At the same time, disruptions in fertiliser production and trade could place additional upward pressure on global food prices over the medium term. - Nordea