Global Food Prices Expected to Decline in 2024, Offering Relief to Shoppers

Estimated read time 3 min read

By Samkele Mchunu

In a promising turn of events, Oxford Economics forecasts a potential bottoming out of high global food prices in 2024. The economic advisory firm suggests that after years of relentless increases, food commodity prices are anticipated to decrease this year, providing much-needed relief for consumers worldwide.

The primary driving force behind this decline is the ample supply of many crucial crops, notably wheat and maize. Recent bumper harvests of these staple crops have led to a steady drop in prices, with wheat futures falling nearly 10% year-to-date and maize futures down about 6% over the same period, according to FactSet data.

The surge in production of wheat and corn grains, particularly in response to the price hike following Russia’s invasion of Ukraine in 2022, has contributed significantly to the abundant supply. As a result, global maize harvests for the marketing year ending August are projected to reach record levels, with wheat harvests also expected to be high, albeit slightly lower than the record set in the previous marketing year.

Despite challenges such as the collapse of the Black Sea Grain initiative and export restrictions, Ukrainian agricultural exports have remained resilient. Russian wheat exports have flooded international markets, further dampening prices.

However, while wheat and maize prices have experienced a significant decline, rice prices have been on a steady upward trajectory. Global supplies have been hindered by export restrictions imposed by India, which accounts for a significant portion of the world’s rice production.

Although global food prices saw a 9% decline in 2023, according to the World Bank, recent months have witnessed a slight rebound in the United Nations food agency’s world price index, driven by increases in dairy products, meat, and vegetable oils.

Despite the positive outlook, Oxford Economics cautions that risks to its food price forecast remain skewed to the upside, primarily due to adverse weather conditions. Recent challenges in the cocoa industry, with prices soaring to record levels as a result of inclement weather and disease in West Africa, underscore the vulnerability of agricultural markets to weather fluctuations.

Nevertheless, Oxford Economics predicts a gradual rise in food prices in the second half of 2024, fueled by factors such as increased demand from buyers in Africa and Asia and potential export restrictions from India in response to persistently high rice prices.

While the baseline expectation is for subdued food prices this year, the possibility of a sharper rebound cannot be discounted, keeping food price inflation higher than anticipated and maintaining pressure on consumers worldwide.

You May Also Like

More From Author

+ There are no comments

Add yours