GLOBAL – After three years of tumult fueled by war, weather-related challenges, and rising energy and input costs, global food commodity prices are expected to see a retreat from record highs in 2024, as predicted by Rabobank’s annual Agri Commodity Markets Outlook report.
The report anticipates a shift toward a semblance of normalcy, offering relief to consumers and producers alike.
The key drivers behind the expected decline in agricultural commodity prices include adjustments in production following years of high prices and weakened demand.
Rabobank’s report identifies lower prices for major commodities such as corn, soybeans, sugar, and coffee, attributing this adjustment to a more adaptable production landscape and persistently weak demand.
Carlos Mera, Head of Agri Commodities at Rabobank, described the past three years as “volatile,” with global agricultural commodity prices grappling with the aftermath of war, adverse weather conditions, high farm input inflation, and subdued consumer demand.
Looking ahead to 2024, Mera expressed optimism for a return to a semblance of normality.
The Rabobank Outlook report evaluates the prospects for a basket of agricultural commodities crucial to the global economy, considering “base case,” “high case,” and “low case” scenarios.
It tracks the outlook for 10 key agri commodities, predicting a favorable environment for bakery, dairy, and animal protein producers as input costs slow down.
According to the report, Brazilian farmers are poised for a record soybean crop in 2024, boosted by favorable La Niña weather conditions transitioning to El Niño.
Rabobank forecasts an impressive 163 million-tonne crop haul. Argentina, a significant exporter of soy products, is also expected to recover after last year’s harvest failure, contributing to increased global stockpiles.
In contrast, wheat faces continued challenges, with Rabobank predicting a fifth consecutive global market deficit.
Weather-related uncertainties in Argentina and Australia, coupled with the potential impact of El Niño on Australian moisture levels, contribute to a less optimistic outlook for wheat in 2024.
Russia’s 2024 harvest could surpass 87 million tonnes, but there is still uncertainty surrounding weather conditions and export restrictions.
The ongoing Russia-Ukraine war continues to impact production and exports, leading to a shrinking exportable surplus for both nations.
Despite a 27% decline in wheat prices since the start of 2023, Rabobank notes that the outlook for agricultural commodities is better than in previous years. Corn demand’s rebound is evident, supported by discounts, although economic headwinds persist for consumers.
The strong US dollar and increased feed grain options for countries like China create challenges for US exports and stock reductions.
“It won’t be plain sailing, but the more positive outlook for the majority of agri commodities should lead to relief for buyers. Governments, businesses, farmers, and consumers will all feel beleaguered after a volatile few years. Now’s not the time to toast a recovery, but the outlook for inflation in agricultural commodities is far more positive than in previous years,” Mera concludes.
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