Supplies of most of the world’s major food commodities are expected to be adequate in 2024-25, although extreme weather, rising geopolitical tensions, sudden policy changes and other factors could all potentially tip the delicate global demand-supply balances and impact prices and global food security, according to a new report from the Food and Agriculture Organization of the United Nations (FAO).
The latest FAO Food Outlook, a biannual publication, offers updated forecasts for the production, trade, utilisation and stocks of major food staples.
On the production side, world outputs of rice and oilseeds are expected to be at record levels, while those of wheat and maize will likely decline modestly. The Food Outlook provides detailed market assessments for wheat, coarse grains, rice, oilcrops, sugar, meat, dairy products and fisheries.
Food bill to rise
The Food Outlook also provides FAO’s preliminary estimate for the global food import bill in 2024, forecast to rise by 2.5 percent to exceed $2 trillion. Those projections are driven by relatively favourable macroeconomic conditions, including steady global economic growth, and lower food commodity prices.
The new edition of the report has a special chapter on the dynamic effects of shocks to shipping costs on the food import bill – a topical variable given conflict-derived volatility on the Black Sea and Red Sea routes and due to drought impacts on the Panama Canal. The analysis shows that these shocks have a positive impact on the value of the FIB in the short term, with a larger effect on the group of net food-importing developing countries (NFIDCs).
The Food Outlook also includes a special chapter focusing on fertilizers, offering a comprehensive review of global fertilizer trade between 2021 and 2023 and a short-term market outlook for 2024-25.
The article shows that in April 2024, fertiliser prices as presented by a basket of nitrogen, phosphorus and potassium prices, averaged $327 per tonne, compared to $815 in April 2022. With the decline in prices, fertilizer trade volumes have rebounded with nitrogen trade close to its 2021 level.
Overall, the short-term outlook for fertilizers suggests stability over the next six months, according to FAO, with improved availability and affordability across the three main ingredients. Future shocks to global fertilizer markets are likely to be determined by developments in energy markets due to geopolitical or other causes.
What the latest forecasts say
Wheat
Global wheat markets are expected to contract in 2024-25 as global wheat production, utilization, trade and stocks are all forecast to decline from their respective 2023-24 levels. Nonetheless, ample supplies and lower demand for feed and other uses globally are likely to maintain a soft tone in wheat markets.
Coarse grains
The outlook for global coarse grain markets points to another season of abundant supplies with stocks seen reaching their highest level since 2017-18. International trade in coarse grains will likely decline in 2024-25, with anticipated smaller export availabilities in Brazil and Ukraine and weaker import demand from China.
Rice
International rice prices have remained elevated amid lingering export curbs and strong purchases by some Asian countries. However, early prospects for 2024-25 point to world production reaching a fresh peak, which could revive rice utilization growth and push stockpiles to a record high.
Meat
Global meat production is forecast to expand marginally in 2024, driven by an increase in poultry meat production, notwithstanding possible negative impacts stemming from extreme weather events, the spread of animal diseases and thin profit margins. Meanwhile, global trade in meat will likely rebound as demand is expected to exceed domestic supplies in leading meat-importing countries.
Sugar
Improved global supply prospects for the 2023-24 season led to significant declines in international sugar prices. Driven by lower sugar quotations, world sugar consumption is foreseen to expand above its recent trend. Global trade in sugar is anticipated to expand, amid ample export availabilities and a stronger global import demand.
Oilcrops
In 2023-24, forecasts of record world outputs for oilseeds and meals/cakes are expected to lead to a further stock accumulation in oilmeals, whereas an anticipated marginal increase in oils/fats production, amid below-potential palm oil outputs, could be outstripped by consumption growth, thus resulting in a somewhat tightening global supply- demand balance for vegetable oils.
Dairy
World milk production is forecast at nearly 979 million tonnes in 2024, up 1.4 percent from 2023. Asia will continue to lead production growth, driven by rising dairy cow numbers and growing contributions of large-scale dairy farms. Meanwhile, global trade in dairy products is predicted to recover moderately despite subdued import demand foreseen for some leading importing countries.
Fisheries
In 2024, stable landings from capture fisheries are expected to be complemented by an expanding aquaculture sector. Stifled overall demand, coupled with an increased supply of some aquaculture species, has caused a fall in prices for certain aquatic products. Overall, rising production costs and stagnant consumer spending remain challenging.
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