Global Food Prices Expected to Decline in 2024, Providing Relief for Shoppers
Global food prices are expected to decline in 2024 due to abundant supply of staple crops, but risks of price rebound persist.
After facing a period of rising food prices around the world, there is hope on the horizon for consumers as global food prices are expected to decline in 2024. According to Oxford Economics, the decline is anticipated to offer some relief for shoppers, following a recent note from the economic advisory firm.
The main driver behind the expected decline in food commodity prices is the "abundant supply" for many important crops, particularly wheat and maize. Bumper harvests in recent months for both staple crops have led to a steady decline in prices. Wheat futures have fallen almost 10% year-to-date, while maize futures lost about 6% over the same period, as reported by FactSet data.
Record Levels of Maize and Wheat Harvests
Global maize harvests for the marketing year ending in August are likely to come in at record levels, according to Oxford's analysis. Wheat harvests are also forecast to be high, although slightly lower than the record level in the marketing year 2022 to 2023. Supply pressures of grains in Russia and Ukraine have also eased, contributing to the decline in prices.
Rice Prices on the Rise
While wheat and corn prices have seen a decline, rice prices have been steadily climbing due to global supplies being hampered by export restrictions imposed by India, which accounts for around 40% of the world's rice production. Contrary to the slump seen in wheat and maize prices, rough rice futures have gained over 8% year-to-date.
Global food prices registered a decline of 9% in 2023, according to the World Bank, while the United Nations food agency's world price index hit a three-year low in February before seeing a slight rebound in March.
Oxford Economics noted that risks to its food price forecast are still "overwhelmingly skewed to the upside," with adverse weather conditions posing a threat. The report also mentioned that buyers in Africa and Asia have held back from purchasing wheat on hopes of even lower prices, which could potentially drive a recovery in prices. Additionally, the high rice prices could encourage more export restrictions coming out of India, leading to a potential rebound in food prices.
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