Food commodity prices are finally set to ease in 2024 after three years of major market instability caused by war, adverse weather and rising energy and input costs.
This is according to specialist food and agribusiness bank Rabobank, which predicts the prices of key commodities, including sugar, coffee, corn and soybeans, to fall next year. It expects production to pick up, bringing down costs for buyers – and in many cases, for consumers too.
Despite some relief on prices and availability, the bank still expects demand to remain weak as shoppers continue to deal with economic challenges, including high inflation and interest rates.
“Describing the last three years of global agricultural commodity prices as volatile is an understatement,” said Carlos Mera, head of agri-commodities at Rabobank.
“Producers are still grappling with the after-effects of war, adverse weather, high farm input inflation and weak consumer demand, but eyeing 2024 as the return to a semblance of normality.”
Mera added “winners and losers will emerge” as agricultural cycles shift next year, but that dairy and animal protein sectors will be some of the “biggest beneficiaries” as productivity in South American markets, such as Brazil and Argentina, improves.
Big sugar producing countries, including Thailand and India, also expect a bump in production in next year’s harvest, which will bring prices down after hitting a 12-year high in 2023 on tight supply.
There are hopes a return to stability for global commodity markets will mean consumers will begin seeing some key foodstuffs become cheaper. However, this will depend on the length and type of contracts that buyers have with their suppliers.
Suppliers and manufacturers are also dealing with an array of other cost pressures, including labour and energy, which could at times offset the decrease in raw product costs.
Rabobank also warned that other important commodities such as wheat were still under pressure over dry weather in some areas of south Asia and Australia, as well as geopolitical tensions in Russia and Ukraine that are preventing export volumes to flow as normally.
“It won’t be plain sailing but the more positive outlook for the majority of agri commodities should lead to relief for buyers,” Mera said.
“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.”