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After a 2.1% decline in global agricultural commodity prices in 2024, the outlook for the year ahead suggests a continuation of this downward trend. While this may be welcome news for consumers, it could spell trouble for the countries that produce the world’s key agricultural commodities − particularly the poorest nations or those reliant on monoculture crops intended for export. That said, the future of the food needed to feed humanity is weighed down by some natural and geopolitical uncertainties.
Above all, climate change, with potential global consequences that are difficult to predict and foresee. However, experts argue that Donald Trump’s return to the White House is the main source of uncertainty. The newly re-elected president − whose recent provocative statements have included calls for the annexation of Canada and Greenland − has already proposed or threatened widespread tariffs on goods imported to the United States. The prospect of one or more trade wars, whether with China, the European Union, or whoever pops into his head, could dramatically affect global flows and food commodity prices.
The FAO's December food price index
Let’s begin with an overview of the situation in the year just gone, as outlined at the global level by the Food and Agriculture Organisation (FAO) of the United Nations. For 2024, the FAO's Food Price Index (FFPI) has recorded an average value of 122 points, marking a 2.1% decline from its 2023 value. This drop was largely driven by a sharp fall in cereal and sugar prices, although this was partly offset by price rises in other areas, such as vegetable oils, dairy products, and meat, which were driven by demand. In December, the index had risen to 127 points—a notable 33.2 points lower than the peak reached in March 2022 (a decrease of 20.7%). However, it was almost 7% higher than in December 2023, registering the first increase after 36 months of decline.
Examining individual sectors, the FFPI for cereals averaged 113.5 points, reflecting a sharp decline of 13.3% compared to 2023. Wheat prices remained relatively stable, with a balance between the low international demand and increased seasonal supply from Argentina and Australia, countered by challenging conditions for winter crops in Russia. Maize prices saw a slight increase, driven by higher demand and limited stocks in the United States. Rice prices fell by 1.2%, with both Indica and fragrant rice driven by a slowdown in demand.
Average sugar prices dropped by 13.2% in 2024, driven by record production in Brazil and the strengthening of the dollar against the real. As previously noted, average vegetable oil prices rose by 9.4%, with soy, rapeseed, and sunflower oil prices falling, partially offset by a 2% increase in palm oil. Meat prices saw a rise of 2.7% year-on-year: beef and lamb prices increased, backed by strong demand and seasonal production constraints, while pork and poultry prices fell. Dairy products experienced a 4.7% increase in 2024, primarily due to robust global demand for butter.
World Bank: 2025 a year of reductions
According to the World Bank's latest Commodity Markets Outlook, 2025 is set to be a year of decline for agricultural commodities, with a predicted drop of 4% in prices in the current year, followed by stabilisation in 2026. After a 21% fall in 2024, wheat prices are expected to decline further, as will the price of maize, which has already fallen by 26% this year. Rice prices are forecast to drop by 11%, following an 8% increase this year, as global production rises. Soya production is also set to increase, leading to an additional 6% reduction in prices. Tropical commodities are expected to cost less after the sharp rises of up to 58% seen in 2024. In general, falling food commodity prices should help improve food affordability in emerging markets and developing countries.
What is certain is that these predictions could be dramatically disproved. While we have already talked about climate risks, as FAO economist Monika Tothova explained to the international news agency Bloomberg, “there is a lot of uncertainty and the future direction of policy is one of those uncertainties.” Furthermore, the World Bank cautions that the link between global commodity prices and food insecurity is becoming ever more complex, due to local crises arising from conflict, natural disasters, and economic shocks.
The unknown factor of Donald Trump on food prices
The greatest source of uncertainty has a name and surname: Donald Trump. There is no question that increases in tariffs and duties, not to mention trade wars, can have an almost immediate impact on global food prices. This is underscored by Rabobank economists Carlos Mera and Oran van Dortin in a report published by the Dutch bank last December. “The policies of the new US administration and the responses of other major powers, especially China and Europe, will shape the outlook for 2025,” the report states. “Given the trade war outlook, farmers' and food processors' margins will be under pressure at different moments in time, depending on the country and the commodity.”
Uncertainties also stem from potential or proposed decisions from the new Secretary of Health, the anti-vaccine Robert F. Kennedy Jr., who, at the time, announced that he would take action against “Big Food”, targeting seed oils, corn syrup, and artificial colourings. Similarly, the future Secretary of Agriculture, Brooke Rollins, head of the America First Policy Institute, will oversee subsidies for farmers and federal food programmes. Further complications could arise from the European Union, as is the case with the trade agreement with the Mercosur bloc, given the opposition from European producers to granting greater access to Latin American products.
Lastly, there is no doubt that specific tensions also surround the uncertain future of cocoa and coffee availability. Cocoa prices nearly tripled due to weather-related issues − droughts, rainfall, and even hurricanes − in key producing countries in Africa, while the price of premium arabica coffee beans surged by 70% amid harvest concerns in Brazil, with both commodities reaching record highs. However, for both coffee and cocoa, these price increases have yet to be fully reflected in supermarket prices.
Cover: Envato image