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What is in store for wheat prices in 2024?

Какво очаква цените на пшеницата през 2024?
Global food prices are expected to fall from record highs in 2024 after three years of turmoil caused by war, climate and escalating energy and input costs, according to Rabobank's annual Agri Commodity Markets Outlook report.

With lower agricultural commodity prices, one of the main drivers of food price inflation is on track to decline. Despite the easing of prices and availability, Rabobank still predicts that demand will remain weak as consumers continue to deal with economic challenges, including high inflation and interest rates. Rabobank expects weak economic growth in 2024 to limit growth in demand for agricultural commodities.

"Describing the last three years of global agricultural commodity prices as volatile is an understatement," said Carlos Mera, head of agricultural commodities at Rabobank. "Manufacturers are still struggling with the effects of war, adverse weather, high input inflation and weak consumer demand, but see 2024 as a return to some semblance of normalcy."

Rabobank forecasts that prices for the main agricultural commodities corn, soybeans, sugar and coffee will ease as production has time to adjust to high prices and demand remains weak. Wheat will remain subject to weather and export uncertainty. Producers of bakery products, dairy products and animal proteins are expected to be the biggest gainers from the slowdown in production costs.

In wheat, Rabobank expects another deficit on the world market, the fifth in a row. There will be surprises in the Southern Hemisphere in the coming months, with Argentina and Australia underperforming. El Niño could leave Australian fields with little moisture ahead of the 2024 sowing season, according to Rabobank.

Russia's 2024 harvest is likely to remain above 87 million tonnes, but any expectation depends on climate uncertainty and export restrictions. Meanwhile, the Russian-Ukrainian war will continue to impact production and exports and lead to shrinking export potential for both countries.

Wheat prices have fallen about 27% since the start of 2023, according to Rabobank, and are now trading at levels well below those seen before the war in Ukraine, which began in February 2022. The weakness in wheat prices is largely due of strong Russian exports, even after the cancellation of the Black Sea Grain Initiative and pressure from falling corn prices.

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