Buyers will be hoping for the ‘semblance of normality’ experts predict – but El Niño and other costs mean it won’t be simple

After three turbulent years punctuated by war, adverse weather, and input and energy cost rises, it looks as if global commodity markets are finally about to catch a break in 2024. Price inflation and supply volatility is set to ease next year, according to agrifood experts at Rabobank – particularly on sugar, corn, coffee and soybeans.

Carlos Mera, the bank’s head of agri-commodities, says producers are “eyeing 2024 as the return to a semblance of normality”. A slowdown in input costs, notably for energy and fertiliser, means sectors that rely heavily on those raw commodities and high energy consumption – like bakery, dairy and animal protein producers – are set to be the biggest winners, Mera says.

“It won’t be plain sailing but the more positive outlook for the majority of agri-commodities should lead to relief for buyers.”

So what factors are driving a more positive outlook? And what are the known knowns that might put a dampener on the situation?

El Niño

While last year’s main driver of food prices was energy inflation, this year’s villain has undoubtedly been climate change, which was responsible for one third of food inflation in the UK, according to a recent report from the Energy & Climate Intelligence Unit (ECIU).

Its effects are likely to be felt for some time to come in 2024, further disrupting crops. The phenomenon, which started last September and can last anywhere between nine and 12 months, affects global temperatures and precipitation, which in turn has a major effect on crop growth, quality and yield – and subsequently, on food prices.

Indonesian palm oil and Australian wheat, for instance will be adversely affected by dryness. But El Niño’s impact is not “entirely negative”, explains Kumar Amit, senior specialist at The Smart Cube. “In some regions, the weather event can be a boon, boosting crop yield and leading to a strong harvest – this is evident in Brazil, where wetter conditions have led to a bumper harvest of both corn and wheat.”

In 2024, world coarse grain demand will rise 2% year on year and stocks nearly 4%, Rabobank predicts. However, it’s too early to tell what exactly will happen in the second half of the year as uncertainty will always govern when it comes to weather, notes The Retail Mind director Ged Futter.

“Climate is having a far bigger impact on global supply, so saying that a commodity is coming down – it might for now, but 12 months is a long time, so who knows what the impact will be on next year’s harvest? We just don’t know.”

Futter also notes spot price changes don’t necessarily determine consumer prices because it all boils down to contract durations, as well an array of other inflationary pressures businesses face. “A commodity market tracks the overall price, not the prices individual companies paid when they bought it, and that has a more significant impact on whether prices then come down on the shelf.”

farmer boots farm dirt crops worker


While 2023 brought a much-needed fall in energy prices from their record highs the year before, experts are more cautious about next year’s picture. Oil prices are set to increase next year as OPEC and Russia “have shown a willingness to cut production to buoy prices and cause economic harm to their geopolitical rivals”, Rabobank’s 2024 commodities outlook report points out, in addition to lower output from the US.

Joe DeLaura, global energy strategist at Rabobank, warns natural gas prices will also “not return to the levels seen two or three years ago” because European buyers that were previously reliant on Russian supplies were forced to switch to more expensive producers such as Qatar, Norway and the US.

A broadening of the conflict in the heavy oil-producing Middle East region in the near term could also have “major repercussions for global commodity prices and push economies into a deeper economic contraction”, Rabobank’s report warns.

Geopolitical tensions also remain in Europe. Even though the ripple effects of Russia’s invasion of Ukraine on energy and fertiliser markets have diminished over the past year, crucial exports from the war-torn region – especially grains including wheat, maize and barley – have proven “significantly more expensive than when the Black Sea grain deal was in place, which risks pushing up grain prices again”, FDF boss Karen Betts recently warned.

Supply chain costs

There are two key pieces of legislation that could further affect commodity trading costs next year – the EU’s anti-deforestation law, which rolled out this June, and the UK’s upcoming amendment to the Environment Act 2021, announced at COP28.

Both require traders of forest-risk commodities such as cattle, sugar, cocoa, coffee, and palm oil to strengthen their due diligence processes and produce extra paperwork proving their products are not linked to illegal deforestation, which many suppliers have already warned will increase their costs.

Those across the supply chain have also flagged the Panama Canal drought as a major concern. Record-low water levels in the busy international shipping route have forced local authorities to slash the number of vessels allowed to make the 40-mile crossing connecting the Atlantic and Pacific Oceans from 32 ships a day in July to 22 per day in December.

The Panama Canal Authority has warned booking slots will fall to 20 per day from 1 January 2024, and then again to 18 per day from 1 February.

This will cause “significant disruption considering the canal handles 5% of the world’s trade”, says Gerry Power, head of country UK at TMX Transform. If the issue persists, or indeed worsens due to El Niño’s dry spells in the area, shipping costs could increase.

lorry hgv truck goods import export dover brexit eu supply chain GettyImages-1343278385

Not all bad news

Lower consumer demand has pushed freight costs down this year, with Freightos data from October showing the rates for shipping a 40 ft container from Asia to the US west coast have dropped by over 80% since the end of April 2022.

Packaging costs have also slumped this year on falling energy costs, a Mintec Q3 2023 glass survey showing prices for soft drink and food container bottles across Europe continued to drop from the previous quarter. Meanwhile, the EU manufacture of glass and glass products index has been trending down since August 2022.

Rabobank’s Mera maintains that even though “now is not the time to toast a recovery”, the outlook for inflation in agricultural commodities is “far more positive than in previous years”.

But Futter is more cautious: “Over the past four years we’ve seen significant ‘black swan’ events that no one was predicting, which showed just how volatile the markets are. You always have to price in risk volatility because there is no stability in any of the global markets at the moment.”

Three up, three down: the outlook for six key commodities

Sources: Rabobank, World Bank, The Smart Cube, Mintec, FAO

Dairy ↑

Dairy crest milk

Global dairy prices have fallen from their 2022 peaks, with Q3 2023 wholesale prices at their lowest in over a year. This trend has been supported by supply growth in key dairy exporting regions such as the US, New Zealand and South America – but lower milk prices and elevated feed costs will continue to negatively impact producer margins, Rabobank says, so it is likely that commodity prices will pick up again in 2024.

Olive oil & palm oil ↑

Olive oil

The woes in olive oil are set to continue well into 2024 due to extreme drought conditions across the Mediterranean, with sources estimating there will be a 278,000-tonne shortfall globally in olive oil production vs consumption next year. There is also likely to be little carryover from 2023 into next year, adding to pressures that will push wholesale prices up. Similarly, slow production of palm oil in key producing nations in southeast Asia is set to drive up prices by 8% in the marketing year 2023/24, according to analysis by The Smart Cube.


Rice GettyImages-155156716

Overall grain prices in the global markets will likely decline in 2024 due to improved supply. However, rice seems to be the exception, says the World Bank, in light of concerns over the impact of El Niño in Thailand and India – which is drying up land and shrinking reservoirs – as well as the latter’s export ban on non-basmati rice, introduced in August and aimed at cooling down skyrocketing domestic prices. Higher rice prices will still be somewhat offset by the continued decline in wheat and maize in 2024, and a potential lift on India’s restriction could further drive down prices.

Coffee ↓

coffee beans

Coffee production in some areas of Africa has been affected by lower-than-usual rainfall, but 2024 forecasts paint a more optimistic picture. Rabobank predicts the coffee market will hit a surplus of 6.8 million bags in 2024/25, spurred by a recovery of the arabica crop in Brazil and Colombia, with both arabica and robusta global prices set to consistently fall throughout the year. Consumer demand is also likely to be stronger in 2024 than it was this year. However, challenges persist as farmers continue to be squeezed by high input costs and labour shortages.

Soybeans ↓


Prices of soybeans, soy oil and soymeal are all expected to drop throughout next year as soy production will benefit from El Niño’s wetter conditions in Brazil, where farmers are expecting to see a record soybean crop. Argentina, the biggest exporter of soy products, is also forecast to recover after last year’s harvest failure, boosting global stockpiles (although currency rates might have an impact). Analysts expect supply to outstrip demand, keeping prices lower.

Sugar ↓


According to the FAO Food Price Index, sugar prices hit a 12-year high in September this year as Thailand and India produced disappointing crops due to dry weather conditions caused by El Niño. However, Rabobank is now expecting a return to more normal conditions in Thailand in 2024/25, which could bring prices down. There are also hopes that better weather in sugar production in other big markets like Brazil will “limit the pain and allow prices to join the downward trend” of other commodities later in 2024, according to the bank’s analysts.