World prices food expected to decline in 2024offering some relief for consumers, reports the Oxford Economics.
“Our baseline forecast is that global food commodity prices will decline year-on-year this year, easing pressure on retail food prices further,” wrote the Thefinancial advisory firm in its recent note.
The main driving force behind the decline in the prices of basic food products is the “plenty of supply” for many important crops, notably wheat and maize.
The harvests in recent months for both key crops have led to a steady decline in prices. Wheat futures contracts
fell nearly 10% year-to-date, while corn futures lost about 6% over the same period, data from FactSet.
The farmers they increased production of both wheat and corn following the highest prices since the Russian invasion of Ukraine in 2022.
As a result, global maize harvests for the marketing season ending in August this year are likely to reach record levels, according to the Oxford analysis. The wheat harvest is also forecast to be high, although slightly below the record level of the 2022 to 2023 marketing season, the report said.
Russia-Ukraine war
At the same time, the pressures on grain supply in Russia and Ukraine. As its chief economist writes Oxford EconomicsKiran Ahmed, despite the collapse of the Black Sea Grain initiative in July last year, Ukrainian agricultural exports are holding up well.
The Russian wheat exports they have also flooded international markets, keeping prices low, he added.
The prices of wheat and corn
Wheat and corn, along with rice, account for more than half of global caloric intake. This means that the direction of their prices will critically affect the food budgets of consumers around the world, the report points out.
As CNBC points outalthough wheat and maize prices have fallen sharply, rice prices have been rising steadily, with global supplies hampered by export restrictions imposed by India; which represents about 40% of world production.
The bad harvests in the country last year also pushed prices higher. In contrast to the decline seen in wheat and corn prices, paddy rice futures have gained more than 8% year-to-date.
The world prices of food recorded a 9% decline in 2023, according to the World Bank. Similarly, the United Nations Food Organisation’s world price index hit a three-year low in February, but saw a slight recovery in Marchdue to increases for dairy products, meat and vegetable oils.
“We expect prices to fall further by 5.6% this year before rising year-on-year next year”Ahmed said.
In this context, Oxford Economics notes that the risks to its forecast for the prices of food they still are “overwhelmingly upwards”with adverse weather conditions on the cards.
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