Fertiliser shock and weather risk are compounding, with Barclays highlighting concentrated agricultural vulnerability in 2027

Overview

This Barclays special report focuses on two converging global agricultural risks: fertiliser market disruption driven by Middle East tensions, and a potential strong El Niño weather event. The report argues that if both risks occur around the 2027 growing season, they could reinforce each other through fertiliser supply, prices, and crop resilience channels, creating concentrated impacts on specific crops, countries, and supply chains.

Core views

The core conclusion is that agricultural vulnerability is not evenly distributed. The highest-risk crops include cocoa, coffee, and rice. At the regional level, multiple agricultural systems in Sub-Saharan Africa are in relatively high-risk positions, while some hotspots also exist in parts of Southeast Asia and Latin America. The report emphasises that this framework is a relative screening tool, not a point forecast of future yield losses.

Analysis framework

The report uses crop-country pairs as the fundamental unit and constructs a yield-sensitivity metric. This metric is obtained by multiplying three dimensions: fertiliser shock probability, yield vulnerability, and weather impact. The report then aggregates the granular results by crop or country using weights and further expresses agricultural production exposure through the share of high and medium risk output.

Methodology notes

• Agricultural risk screeningYield sensitivity metric

  yield sensitivity metric = fertiliser shock likelihood × yield vulnerability × weather impact

  Each component is scaled to the 0 to 1 range, and multiplication is used to capture a potential amplification effect between fertiliser supply shocks and weather shocks.

• Supply chain riskFertiliser shock likelihood

  Simple average of import dependence, Middle East import dependence, supplier concentration, and economic absorption capacity

  This dimension measures the relative likelihood that a country faces fertiliser supply chain disruption or price shock, with supplier concentration measured by HHI and economic absorption capacity approximated by an inverse of GDP per capita.

• Crop vulnerabilityYield vulnerability

  Combining fertiliser use intensity and fertiliser efficiency

  The report assesses the current dependence of yield on fertiliser input using fertiliser use per ton of crop output and fertiliser use efficiency.

• Climate riskWeather impact

  Historical yield changes during the 2015/16 Super El Niño period

  The report compares 2016 yields with average yields in the relatively neutral climate period of 2012-14 to identify historical sensitivity of different crop-country combinations to El Niño-related weather.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Cocoa

  High-exposure agricultural commodity

  Strengths

  Production risk has high detectability in the framework, helping investors focus on supply chain and price-sensitive points.

  Weaknesses

  A large share of global output falls into the high-risk category, and concentration in producing regions increases the risk transmission channel.

  Comparison

  Compared with potatoes, barley, and sugar beet, cocoa has a higher average yield sensitivity.

  Risks

  Weather shocks, reduced fertiliser availability, production concentration, and low absorption capacity in low-income economies.

• Coffee

  High-exposure agricultural commodity

  Strengths

  The framework shows high concentration of risk, making it a key crop to monitor for overlapping weather and fertiliser shocks.

  Weaknesses

  A large share of production lies in high-risk categories, making it sensitive to regional agricultural system vulnerabilities.

  Comparison

  Compared with oil palm, coffee is more tilted toward high-risk exposure, while oil palm is more concentrated in medium-risk categories.

  Risks

  El Niño-related weather disturbances, rising fertiliser prices, supply chain stress, and producing-region concentration.

• Rice

  High-exposure staple crop

  Strengths

  Rice is a key global staple, and changes in its risk have high relevance for food-security and inflation monitoring.

  Weaknesses

  It is sensitive to nutrient inputs and weather conditions, and some producing areas may face compounded shocks.

  Comparison

  The report ranks rice as one of the most exposed crops, above lower average-risk groups such as potatoes, barley, and sugar beet.

  Risks

  Strong El Niño events, fertiliser supply disruptions, food price effects, and policy responses in trade.

• Sub-Saharan Africa agricultural systems

  High-risk regional exposure

  Strengths

  The framework identifies concentrated vulnerabilities across multiple crops in multiple countries.

  Weaknesses

  Lower economic absorption capacity, dependence on fertiliser imports, and crop composition can amplify shocks.

  Comparison

  Risk concentration is higher than in most other regions, although there are also local hotspots in Southeast Asia and Latin America.

  Risks

  Food security pressure, sovereign fiscal stress, rising import costs, and supply chain disruptions.

Key data

• Share of Middle East in global fertiliser exportsAbout 14%The report says the Middle East is also a major supply source for natural gas, ammonia, sulphur, and phosphate products.
• Contribution of fertiliser to crop yields in modern agricultural systemsAbout 40-60%The report cites research that crops such as maize, rice, and wheat are especially dependent on nutrient inputs.
• Climate variance explained in global crop yield volatilityAbout one-thirdThe report therefore incorporates historical El Niño yield performance into the weather impact indicator.
• Countries covered by the framework72 countriesSome charts are based on a sample of 72 countries with IFA fertiliser intensity data.
• High-risk definition75th to 100th percentiles of the yield sensitivity metricMedium risk is defined as the 50th to 75th percentiles, and the threshold can be adjusted by use case.
• Yield-weighting window2020-24Country-level aggregation is weighted by each crop's share in national agricultural production.

Impact & implications

For investors, agricultural shocks can transmit through food prices, inflation, trade balances, sovereign fiscal positions, supply chains, and corporate earnings. The investment implication is that risk monitoring should not stop at global food-availability levels, but should be narrowed to specific crops, countries, and supply chain nodes, with particular focus on exposure to cocoa, coffee, rice, and Sub-Saharan Africa agricultural links.

Risks

• Fertiliser supply chain disruptions may lead farmers to apply less fertiliser, weakening crops' ability to withstand climate stress such as drought, heat, and pests and diseases.
• There is uncertainty about the actual path and intensity of a strong El Niño, and historical outcomes from 2015/16 cannot be mechanically extrapolated into future yield losses.
• The framework is a relative risk ranking, not an absolute yield-loss forecast; different threshold choices can alter the shares of high and medium-risk production.
• Aggregation at the country or crop level may mask local differences across regions, varieties, and supply-chain stages.
• Some charts and table data in the report text are not fully expanded, so specific rankings and percentages should be verified against the original report visuals.

What to watch

• El Niño index and forecasts from major meteorological agencies during 2026-2027 for intensity, duration, and regional precipitation anomalies.
• Changes in Middle East exports, shipping, and trade restrictions for fertiliser, natural gas, ammonia, sulphur, and phosphates.
• Nitrogen, phosphate, and potassium fertiliser prices, together with subsidy, financing, and import capacity conditions in low-income agricultural economies.
• Planting, fertiliser application, yield, and inventory data from major cocoa, coffee, rice, and oil palm producing zones.
• Food prices, trade balances, and policy interventions in high-risk countries in Sub-Saharan Africa, Southeast Asia, and Latin America.