AI Chips Just Rescued World Trade

The WTO has doubled its 2026 trade forecast on an AI boom, but fertiliser, fuel and freight costs are pushing world food prices to their highest since 2022.

The World Trade Organization’s latest outlook, released in Geneva on 8 October, lifts expected growth in world merchandise trade volumes for 2026 to 3.9%, more than double the 1.9% it projected in March. It also raises its 2027 goods forecast to 4.1%, from 2.6%.

For food, agriculture and logistics businesses, the headline hides a split. AI hardware is carrying global trade higher. Food and farm supply chains are dealing with something quite different: higher input costs, pricier freight and the steepest run in world food prices in almost four years.

At a glance

The upgrade is mostly about chips, not food

The WTO says trade in semiconductors, servers and other AI data-centre equipment rose about 67% year on year in the first half of 2026. By value, these AI-enabling goods made up almost half (47%) of all merchandise trade growth over that period, and the trade is concentrated in a small number of economies, mainly in Asia.

Take AI hardware out, and underlying growth in everything else, including food, farm goods and consumer products, looks far more modest.

The gap between volume and value tells the same story. Trade volumes grew about 3.5% year on year in the first half, while trade values rose about 15%. Higher energy prices and expensive tech shipments explain most of that difference. In food terms: buyers are paying a lot more for not much more product.

Fertiliser: the WTO’s warning for farmers

The WTO links disruption around the Strait of Hormuz to higher fuel and fertiliser costs, which squeeze household purchasing power. For agriculture, this is the most important line in the outlook.

The Gulf is a major exporter of nitrogen fertilisers such as urea and ammonia, and of sulphur used to make phosphate fertilisers. When shipping through Hormuz is disrupted, a large share of the world’s traded fertiliser supply is affected.

The numbers already show it:

• Urea spiked in March 2026, reaching about $725 a tonne, its highest level in four years, after the conflict began.
• The World Bank’s April outlook forecast urea prices up nearly 60% on average in 2026, with potash up about 12% and DAP up about 6%. It warned overall fertiliser prices could rise more than 30% this year if Hormuz disruption persisted. These were forecasts made in April, and they depend on how long the disruption lasts.

Why it matters: fertiliser costs hit food supply chains with a delay. Farmers who pay more for nitrogen this season either cut application rates, which can reduce yields, or pass higher costs into crop prices. Either way, the effect tends to show up in grain and oilseed markets over the following seasons, not immediately.

Food prices are already climbing

The FAO’s Food Price Index, released on 5 October, rose to 136.0 points in September, up about 1.5% from August. It was the third straight monthly increase and the highest reading since November 2022.

FAO’s chief economist pointed to disruption in the Strait of Hormuz and the Black Sea, combined with climate shocks, as drivers of the price build-up, and warned these pressures could feed through to consumer food prices if they continue. FAO also noted that uncertainty over Hormuz shipping was keeping concern over fuel, fertiliser and freight costs high, which supported maize and other crops linked to biofuels.

Put the two reports side by side and the picture is clear. The WTO sees fertiliser and fuel costs rising. The FAO sees grain, sugar and vegetable oil prices rising. Food supply chains sit between the two.

Freight: a tougher year for moving food

Services trade is moving the opposite way to goods. The WTO cut its 2026 services forecast to 3.3% from 4.8%, mainly because of higher aviation fuel costs linked to the conflict.

• Transport services growth: cut to just 0.9% for 2026
• Travel services growth: cut to 0.2%

Transport services include freight, port handling and related services. Growth below 1% points to a sector absorbing higher costs rather than expanding.

For food exporters and importers, that matters in three ways:

1. Perishables by air (fresh produce, seafood, flowers) face higher jet fuel costs and competition for cargo space from high-value tech shipments.
2. Bulk and reefer shipping remains exposed to rerouting around Middle East chokepoints, which adds days and fuel to voyages.
3. Gulf food import markets, which depend heavily on imported grain, meat, dairy and produce, are under pressure. The WTO expects Middle East imports to fall 15.4% in 2026, a sharp hit to exporters that supply the region.

The WTO expects services trade to rebound to 6.4% in 2027. That forecast is conditional on conditions in the region easing.

Where trade is growing

Africa’s strong import growth stands out for food and agri suppliers looking for demand outside traditional markets. North America’s weak import growth reflects tariffs and a continued shift in sourcing: US imports from China fell 29% in 2025, and China’s share of US imports has dropped to about 9.3%, from more than 20% before the 2018 trade tensions.

What it means for the supply chain

For food buyers and procurement teams: Expect cost pressure to build rather than ease. Cereals, sugar and vegetable oils are already rising, and higher fertiliser costs this season could support crop prices into 2027 if they persist. Locking in forward cover on key ingredients deserves a fresh look.

For farmers and agri suppliers: Fertiliser is the swing cost. Watch nitrogen prices and Gulf shipping closely when planning application rates and next season’s input purchases.

For food exporters: Middle East demand is shrinking in 2026, while Asia and Africa are growing. Diversifying away from Gulf-dependent export plans looks prudent while the region remains disrupted.

For logistics providers: More goods volume overall, but much of it is high-value AI hardware moving by air. Food and bulk freight will not rise in line with the headline number, and fuel costs remain the main pressure.

For pharma supply chains: Competition for air cargo space and higher jet fuel costs could keep temperature-controlled air freight rates firm.

The risks the WTO flags

1. A wider or longer conflict in the Middle East
2. Russia’s continuing war in Ukraine, a key factor for Black Sea grain and oilseed exports
3. A slowdown in AI investment, which would remove the biggest driver of the 2026 upgrade

For food and agriculture, the first two matter most. Both directly affect fertiliser, grain and freight.

Bottom line

World trade is growing faster than expected, but the gains are narrow. AI hardware is doing the heavy lifting. Food and agriculture face the other side of the same story: higher fertiliser, fuel and freight costs, and world food prices at their highest level in nearly four years. For anyone buying, growing or moving food, the WTO’s upgrade is not a reason to relax.

FAQ

What is the WTO’s 2026 trade forecast? The WTO now expects world merchandise trade volumes to grow 3.9% in 2026, up from 1.9% in its March forecast, and 4.1% in 2027.

Why did the WTO raise its forecast? Mainly because of booming trade in AI-related goods such as semiconductors and data-centre equipment. These goods rose about 67% year on year in the first half of 2026 and made up nearly half of goods trade growth by value.

How does the WTO outlook affect food and agriculture? The WTO links disruption around the Strait of Hormuz to higher fuel and fertiliser costs. For agriculture, that means higher input costs that tend to show up in crop prices over later seasons.

Why does the Strait of Hormuz matter for fertiliser? Gulf producers are major exporters of urea, ammonia and sulphur. Disruption to shipping through Hormuz affects a large share of the world’s traded fertiliser supply, which pushed urea to a four-year high in March 2026.

Are world food prices rising? Yes. The FAO Food Price Index rose to 136.0 points in September 2026, its third straight monthly rise and highest level since November 2022, led by cereals and sugar.

Will freight costs for food stay high? The WTO cut its 2026 transport services growth forecast to 0.9%, mainly because of higher fuel costs. That suggests freight costs are likely to stay elevated while the Middle East disruption continues.

What could change the outlook? A wider Middle East conflict, Russia’s war in Ukraine affecting Black Sea exports, or a slowdown in AI investment.

Sources

Additional Resources

Data accuracy note: WTO figures are taken from news reports on the 8 October 2026 outlook on the day of release; check the WTO’s full report before quoting them. FAO figures are from the 5 October 2026 Food Price Index release. The World Bank fertiliser forecasts date from April 2026 and were conditional on how long Hormuz disruption lasted; actual 2026 averages may differ. The WTO’s 2026 and 2027 figures are projections and depend on conditions in the Middle East, energy prices and AI investment.