crops field

While the UK is braced for the prospect of Brexit-related food price inflation, global food prices are expected to remain relatively low in 2017 thanks to record-high stocks of major agricultural commodities.

Wheat and corn are being stored in huge volumes around the world, which will weigh on prices throughout next year, the Rabobank Global Outlook 2017 report predicts.

Prices for palm oil are also expected to fall as production bounces back, it says, while coffee prices should decline “significantly” as a result of a strong 2016/17 crop and a recovery in Brazilian production in 2017/18.

Cocoa prices will recover from near three-year lows due to rising demand, but production increases will constrain price rises, Rabobank predicts.

Soybean prices are set to rise, meanwhile, with supplies “unlikely” to keep pace with fast-growing demand, while sugar prices will be supported by global production deficits.

Dairy prices will also remain high as a result of rising global demand and EU intervention, while pork could be bolstered by strong US export growth.

Factors that could still influence agricultural commodity prices in 2017 include adverse weather events, potential currency fluctuations and any “protectionist” economic policies in the US, Rabobank says.

But the biggest uncertainty for agricultural markets next year will be China, it predicts.

“The news that global food prices are on the whole expected to remain low during 2017 is good news for food manufacturers and consumers, with some, especially those in the UK, grappling with higher import costs as a result of currency fluctuations,” says Stefan Vogel, Rabobank’s head of agri commodity markets and an author of Global Outlook 2017.

“Yet while the outlook is generally stable, we see China as the wildcard.”