World Bank foresees 6% drop in food price index for 2024

May 27, 2024 (MLN): The World Bank's food price index is expected to decline by 6% in 2024 and an additional 4% in 2025, as stated in a recent blog post.

However, the outlook is subject to several risks, including weather (especially the upcoming La Niña episode), geopolitics (which could affect input prices such as energy and fertilizers), and potential maritime chokepoints (which could increase transportation costs).

The World Bank’s food price index eased in April after falling 4% in Q1 2024. Wheat and maize prices hit three-year lows during the first four months of 2024, mostly attributed to larger production by major exporters and favorable prospects for the next harvest.

Rice prices, which made significant gains in 2023Q4 and earlier in 2024, have also retreated since February, reflecting the currency depreciation of major exporters against the U.S. dollar, sluggish demand amid increased prices, and seasonal supply increases.

Similarly, the oils and meals price index declined by 5% in Q1 2024, mostly in response to near-record soybean production in Brazil, a near-doubling of production in Argentina, and subdued Chinese demand.

Looking ahead, the World Bank further states that inventories for food commodities are expected to decline marginally in the upcoming season.

The stock-to-use (S/U) ratio, a rough indicator of supply relative to projected demand, is expected to continue its downward trend that began four years ago.

It stands currently at 26.9%, down from 30.2% in 2019 but much higher than its historical low of 17.3 percent in 2007.

For the upcoming 2024-25 season, the S/U ratio for wheat is projected to register a marginal decline (mostly reflecting declining stocks in Russia and the EU), while the ratio for maize and rice remains flat.

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