Global Economic Viewpoint: El Niño risks are building on top of high fertilizer prices

Research evidence excerpt

Global Economic Viewpoint: El Niño risks are building on top of high fertilizer prices

% yoy. Brazil’s sugar output is also at risk and could fall by around 5% yoy in 2026/27. BofAS

claudio.irigoyen@bofa.com

In turn, we see India and Thailand’s combined sugar output declining by at least 10%.

Pedro Diaz

Corn presents the most compelling upside case CaribbeanBofAS Economist

Following our March discussion of a tight 2026/27 US corn balance sheet amid Iran- pdiaz2@bofa.com

related geopolitical risks (see Geopolitics feeding food inflation), and broadly Global Commodity

Daryna Kovalska

underpriced weather threats (see The missing weather risk premium), El Niño reinforces Commodity Strategist

the bullish outlook. We see 2026/27 corn prices moving toward the $5.5-6.0/bu level. MLI (UK) daryna.kovalska@bofa.com

Francisco BlanchEquities: Fertilizer availability adds to grain inflation Commodity & Deriv Strategist

As the Strait of Hormuz closed, 30% of the world’s ocean-going nitrogen and 50% of the BofA Europe (Madrid)

world’s ocean-going sulfur has been trapped. These products ultimately set marginal francisco.blanch@bofa.com

fertilizer price/costs around the world, and thus have driven material inflation through Equity Strategy Matthew DeYoe, CFA

fertilizer value chains, which compounds with the weather effects from El Niño. Research Analyst

Southern Hemisphere demand could accelerate and complicate matters from here. BofASmatthew.deyoe@bofa.com

EM Strategy: Long USD/ZAR appears as the best hedge IsabellaResearchSimonatoAnalyst >>

We have been arguing to add hedges into the summer for an autumn which may bring Merrill Lynch (Brazil)

isabella.simonato@bofa.com

Fed hikes and negative risk seasonality, and El Niño adds to the negatives. Our preferred