FAO foresees stable outlook for food commodity markets

The United Nations Food and Agriculture Organisation (FAO), has projected that supplies of most global food commodities are expected to be stable in the 2024/25 market year.

In its biannual global Food Outlook report, the United Nations notes that although extreme weather, rising geopolitical tensions, sudden policy changes and other factors could potentially tip the delicate global demand-supply balances and impact prices, food supply will be adequate for 2024/25 year period.

The FAO provides a preliminary estimate for the global food import bill in 2024, which it 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 UN food body states.

On the production side, global outputs of rice and oilseeds are expected to be at record levels, while those of wheat and maize are likely to decline moderately.

The report provides detailed market assessments for wheat, coarse grains, rice, oil crops, sugar, meat, dairy products and fisheries.

For Nigeria, the report reveals that the country’s wheat imports are forecast to rise by 0.6 percent to 23.2 million tonnes in 2024/25, driven by sustained local demand and low inventories

Also, rice production is expected to remain stable at 5.3 million tonnes in 2024/25, with no significant changes from the previous year.

Additionally, in a detailed analysis of global fertilizer trade, the FAO presented a comprehensive review of global fertilizer trade between 2021 and 2023 and a short-term market outlook for 2024/25.

It 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.

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

According to the report, fertilizer 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, according to the FAO, the short-term outlook for fertilizers suggests stability over the next six months, 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.