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"Buffers Running Down Quickly": HSBC Warns Next Global Food Shock Brewing
Warnings on Wall Street about a confluence of stressors building deep within global agricultural supply chains are growing louder by the week, raising the risk of a food crisis next year.
JPMorgan analysts warned last week that the next global food crisis "won't be short-lived." HSBC analysts sounded a similar alarm, pointing to tightening grain supplies, El Niño, disruptions at maritime chokepoints, and a supply "squeeze" sending grain prices soaring.
HSBC economist Jamie Culling, who covers Australia, New Zealand, and global commodities, published a note Tuesday titled "Food Prices Rising Due to the Weather and Wars," warning that the supply squeeze is already showing up in spot markets. Cereal prices, including wheat, corn, barley, and rice, rose 22% year over year through July.
"Having strong supplies and stocks going into this year has helped keep prices from spiking higher, but the buffer is now starting to be run down quickly," Culling warned clients.
Culling continued:
Supply 'squeeze' underway
Agricultural supply chains face a number of shocks, including the impact of the Middle East conflict, a recent escalation of the Russia-Ukraine war and extreme weather events, including a Northern Hemisphere heatwave and strengthening El Niño. Having strong supplies and stocks going into this year has helped keep prices from spiking higher, but the buffer is now starting to be run down quickly.
On the USDA's latest forecasts, global grains production is expected to fall to be below consumption in 2026/27, its first shortfall since 2020/21 and largest shortfall since 2006/07. Stock-to-use ratios are set to tighten, alongside a fall in crop yields.
Agricultural prices have risen. Grains prices are up 22% y-o-y, and some 'finer foods' prices, such as cocoa and coffee, have spiked higher too.
The Middle East conflict has been a key disruptive factor for agricultural commodities (see Fertiliser, food, and the Middle East conflict, 17 April 2026). The closure of the Strait of Hormuz has continued to constrain fertiliser and sulphur supply, and kept broader input cost pressures elevated. Export restrictions from some economies in response to this 'squeeze' have been another source of pressure.
The recent escalation in the Russia-Ukraine war has seen a sharp drop in shipments from the Black Sea. The region supplies nearly a third of global wheat trade and one-fifth of global fertiliser trade, so this represents a key risk to supply, just as grain harvests are ramping up. Damage to refineries in Russia has also lifted diesel prices.
The weather has also been a big factor, with Northern Hemisphere heatwaves, an intensifying El Niño and a positive Indian Ocean Dipole posing downside risks to agri-commodity supply. The impact of previous El Niño episodes varies by region and commodity, but yields tend to decrease and prices increase. Weather-related risks have seen cocoa prices spike 50% in the past few months and lifted coffee prices. Weather risks can also deliver non-linearities, such as more disease outbreaks.
We see supply-side issues continuing to dominate developments in agricultural commodity prices, meaning risks of higher prices on average, increased price volatility, and greater instances of food insecurity in the coming period.
Professional subscribers can read the full note "Food prices rising due to the weather and wars" here on our new Marketdesk.ai portal.
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Limits On Border Patrol Arrests In California Lifted By Federal Appeals Court
Authored by Matthew Vadum via The Epoch Times,
A federal appeals court on Aug. 24 rescinded a preliminary injunction that limited U.S. Border Patrol stops and arrests in California's Central Valley.
The U.S. Court of Appeals for the Ninth Circuit found that a federal district court failed to properly analyze whether the plaintiffs had standing to seek forward-looking relief based on alleged harms in the past.
Standing refers to the right of someone to sue in court. The parties must show, among other things, a strong enough connection to the dispute to justify their participation in a lawsuit.
The Ninth Circuit sent the lawsuit challenging immigration detentions back to the district court to allow it to revisit its legal analysis after that court issued a preliminary injunction limiting U.S. Border Patrol's ability to stop and arrest people.
The new ruling, which does not dismiss the lawsuit itself, is a tactical win for the Trump administration because it eliminates - for now - a preliminary injunction that limited Border Patrol's ability to stop and detain people. The appeals court sent the case back to the federal district court for a limited do-over on the question of standing.
The lawsuit concerns Section 1357(a)(2) of the Immigration and Nationality Act, which allows Border Patrol agents to make warrantless arrests only if they have reason to believe two things: that the person is in the country unlawfully, and that the person is likely to escape before a warrant can be obtained. The plaintiffs in the case took the position that the agents made arrests without properly assessing whether people were actually flight risks.
The American Civil Liberties Union (ACLU) sued on behalf of the plaintiffs, the United Farm Workers of America and several farm workers, arguing that over a three-day period in Kern County, California, in January 2025, Border Patrol unlawfully detained individuals - including day laborers - without having a reason to believe they were likely to escape before a warrant could be issued. The enforcement project was known as Operation Return to Sender.
Residents of Bakersfield and the vicinity "started disappearing" in "the middle of citrus harvesting season," and this alarmed local residents who contacted the ACLU, the group said in a summary.
In a federal class action, the ACLU argued the Border Patrol was using "a cruel tactic to strip people of their right to an immigration hearing and coerce them instead into agreeing to "voluntary departure," which carries with it a ban on returning to the United States for up to 10 years.
In April 2025, U.S. District Judge Jennifer Thurston granted a preliminary injunction covering the Eastern District, which is California's Central Valley.
The order prevented Border Patrol from stopping people in violation of the Fourth Amendment or arresting them unless officers comply with federal law. The injunction required that to carry out an arrest, the officers must have a reasonable suspicion of unlawful presence in the country.
On appeal, the federal government argued that the district court only looked at past events in Kern County. Instead, the court should have looked at whether the same unlawful stops and arrests were likely to happen again soon, the government said.
A three-judge panel of the U.S. Court of Appeals for the Ninth Circuit ruled that the government was correct when it said that the district court failed to engage in the "correct standing analysis before granting preliminary prospective injunctive relief."
The U.S. Department of Justice, which represents the Border Patrol, hailed the new ruling.
"This is a good outcome, and it reinforces our confidence in related cases - like [Vasquez Perdomo v. Noem], which raises similar claims and where we've already prevailed once at the Supreme Court," a spokesperson told The Epoch Times.
In that case, in September 2025, the U.S. Supreme Court temporarily put on hold a lower court order restricting immigration stops in Southern California.
The court did not issue a formal opinion, but Justice Brett Kavanaugh wrote a concurrence saying the plaintiffs did not have standing to pursue a forward-looking injunction. He said that past unlawful stops do not by themselves prove a real and immediate threat that the same individuals will be stopped again in the same way.
The Epoch Times reached out to the ACLU for comment. No reply was received by publication time.
Tyler Durden Tue, 08/25/2026 - 20:05