Oxford Economics: Fall in food prices in 2024 – ‘Leverages’ wheat and corn

The global rise in food prices may have reached apogee and from this year it is possible that she will start one downturn in costs, according to analysts at Oxford Economics, resulting in the reductions offering a significant relief to households groaning from the increased cost of living.

“Our basic forecast is that global prices of essential food products will note annual decline this yearreducing pressure on retail food prices,” the financial consultancy said, explaining that the driver for the de-escalation is “abundant supply” for many important crops, notably wheat and corn.

A typical example is how the Wheat futures are down nearly 10% year-to-date while corn futures are sliding about 6%, according to FactSet data. At the same time, farmers increased production of the 2 commodities following the price rally seen since the start of Russia’s invasion of Ukraine in 2022.

As a result, global supplies by August this year are likely to reach record levelswith the wheat harvest even remaining particularly high. At the same time, pressures on grain supply from Russia and Ukraine have eased, with Kiev’s agricultural exports rising while Moscow’s wheat exports have also flooded international markets.

Wheat and corn, along with rice, represent over half of the global food chain. This means that the direction of their prices will significantly affect the food budgets of consumers around the world. Although wheat and corn prices have fallen sharply, rice prices have been steadily rising, with global supplies hampered by export restrictions imposed by the India, which accounts for about 40% of world rice production. Poor harvests in the country last year also pushed prices higher. In contrast to the decline seen in wheat and corn prices, rice futures have strengthened more than 8% in 2024.

Global food prices fell by 9% in 2023, according to the World Bank. Similarly, the United Nations Food Organisation’s world price index fell to a three-year low in February, but rebounded slightly in March, driven by increases for dairy products, meat and vegetable oils. “We expect prices to decline further by 5.6% this year before rising year-on-year next year,” analysts estimate.