Rabobank predicts a decline in global food prices in 2024 following a drop in demand
After three years of record growth, fueled by the war in Ukraine, adverse weather, and higher energy and natural resource costs, global food prices will decline in 2024, particularly for staples such as sugar, coffee, corn and soybeans, reducing consumer spending and consumers This was reported by Rabobank experts in the weekly report "Prospects for the Development of Agricultural Products Markets".
Demand for agricultural products in 2024 will remain low due to economic problems, in particular high inflation and interest rates, and it will additionally be limited by the slow development of the world economy. Markets for basic agricultural products will remain uncertain. The wheat market may experience the fifth consecutive shortage of supplies due to weather conditions and a possible limitation of exports from the Black Sea region. At the same time, rapeseed exports will increase thanks to the end of the drought in Canada and a good harvest in Ukraine. But palm oil prices will remain high due to El Niño, and demand for vegetable oils will grow exponentially.
Sugar prices hit a 12-year high in 2023 on the back of poor harvests in India and Thailand, but Thailand will resume production in 2024-25, leading to lower prices.
Nominal food prices began to rise in the summer of 2020 and peaked in March 2022, after which they began to decline. In May 2022, the UN FAO index was 91%, and in March 2023 – already 160%. The grain price index increased from 98% to 173.5% during this period. In October 2023, the food price index was 120.6%, and the grain price index was 125%.
Wheat prices also fell, and competition between exporters intensified. USDA's FAS estimates that in 2023/24 FY, world wheat production will decrease compared to the previous season, consumption will remain the same, and stocks will be depleted to the lowest level since 2015/16 FY.
Prices have not yet fallen to pre-crisis levels. Moreover, sugar prices support the difficult conditions of the current year.
According to the UN FAO, in October, the world food price index decreased by 0.5% compared to September (which is 10.9% lower than the October 2022 indicator), in particular, for grains - by 1%, vegetable oils - by 0, 7%, while dairy products rose 2.2% after 9 months of decline. Over the year, the index for grains fell by 17.9%, for vegetable oils - by 20.7%, and for dairy products - by 20.1%.
