Arab News Japan

TOKYO: Financial forecaster Oxford Economics is predicting that global food prices will decline in 2024 after reaching record highs in 2022. However, prices will remain around 45 percent higher than in 2019.

Its latest report says that falling input costs and healthy harvests should help the continued decline in prices but notes that prices remain at historically high levels due to increases in energy prices, interest rates and wages, as well as trade restrictions.

Crude oil prices are forecast to decline through 2024 but are expected to remain almost 20 percent higher on average than pre-pandemic peak levels, maintaining pressure on transport costs. 

Similarly natural gas – a key factor for fertilizers – will also see prices that remain well above pre-pandemic levels. European prices are expected to average almost more than double their 2019 levels.

One main risk in 2024 will be the arrival of El Niño conditions that could disrupt global food supply. An escalation in tensions in the Black Sea could also have a negative effect on Ukrainian grain exports.

El Niño events have the potential to be very disruptive to food prices, as changes in global weather patterns can affect harvests across crops and global food prices rise as a result.

As for Ukraine, the risk remains that an escalation in the conflict around the Black Sea could curtail exports much more heavily, exerting upward pressure on prices.

Oxford Economics believes that global food prices as measured by the World Bank food price index will drop by 4-5 percent in 2024.

Soybean and rice harvests are set to hit record levels in 2023-24, and although wheat harvests are likely to be lower in the same time period, they are already at record levels. Maize harvests are also set to be strong.

Weak demand from the animal feedstock segment may affect corn and soybean markets and low wheat prices could curtail production. 

One negative factor preventing price normalization is increasing protectionism. Food insecurity has worsened considerably, leading governments to implement export bans and tariffs.

The Indian government has banned the export of non-basmati rice and taxed exports of basmati rice. With India accounting for around 40 percent of global production, the move has resulted in a sharp drop in global supply and has bolstered prices.