FAO foresees stable food commodity markets amid 2024/25 outlook

Source: Freepik

The latest FAO Food Outlook, a biannual publication, offers updated forecasts for the production, trade, utilization 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 outlook provides detailed market assessments for wheat, coarse grains, rice, oil crops, sugar, meat, dairy products and fisheries.

The outlook also provides FAO’s preliminary estimate for the global food import bill in 2024, forecast to rise by 2.5% to exceed $2t. 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).

Focus on fertilisers

The outlook also includes a special chapter focusing on fertilisers, offering a comprehensive review of global fertilizer trade between 2021 and 2023 and a short-term market outlook for 2024/25.

The chapter tracks the series of shocks, including the war in Ukraine, that directly or indirectly had an impact on primary nutrients such as nitrogen, phosphorus and potassium.

Soaring natural gas prices were a major catalyst, rendering fertiliser production uneconomic, while other factors, including shipping and insurance costs as well as trade measures, also drove world fertiliser prices higher. The shocks led to a significant contraction in fertiliser trade in 2022 with a rebound in 2023 so similar levels of 2021.

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, fertiliser trade volumes have rebounded with Nitrogen trade close to its 2021 level.

Overall, the short-term outlook for fertilisers suggests stability over the next six months, according to FAO, with improved availability and affordability across the three main ingredients. Future shocks to global fertiliser markets are likely to be determined by developments in energy markets due to geopolitical or other causes.