Rabobank foresees that food prices will also remain high in 2022. The difficult weather conditions in the United States, Brazil and Argentina – as a result of La Niña – contribute to this. Rising input costs for agricultural entrepreneurs also pose a problem in the availability of raw materials.
Food prices will remain high in the coming year. Rabobank paints this picture in the report 'Agri Commoditys Markets Outlook'. Unfavorable weather – exacerbated by the La Niña cycle – hitting the United States, Brazil and Argentina will become one of the biggest challenges for food production. The high prices of energy, fertilizers, transport and labor will also be in force next year. In a 'normal' year, agricultural entrepreneurs were now busy expanding the acreage – as a result of the high prices – but this is not possible with the increase in input costs. In particular, the prices of grains, oilseeds, staple foods, coffee, sugar and palm oil remain high as a result.
"Prices will not return to pre-corona pandemic levels next year," said Carlos Mera, head of agricultural commodities at Rabobank. “While the number of corona-related disruptions is receding, inflationary pressures and bad weather continue to hit producers. Governments are closely monitoring prices. High input costs, expensive shipping and strong demand are a toxic recipe. The knock-on effect of higher food prices on plagued societies in underdeveloped countries should not be ignored next year." This is consistent with the message released this week by the Food and Agriculture Organization.
'Availability remains a thing'
The availability of raw materials will also be 'a thing' in the coming year. Tough weather conditions in the United States and high export taxes from Russia will affect the availability of wheat next year. Although the bank expects a small surplus. This contrasts with the large deficit this year, the largest deficit since 2013. "But if this surplus becomes reality, it will only reach the market in the second half of next year."
Due to the high demand, maize is also still available to a limited extent. "High prices for fertilizer, seed, machinery, labor and rent affect production. At the same time, the demand for ethanol, of which corn is a major ingredient, is growing, and exports to China are still increasing." According to the bank, this imbalance has a driving effect on consumer prices. The sugar market is also noticing the effects of increasing ethanol production.
The availability of coffee will also decrease next year. The modest increases in Colombia and Vietnam cannot compensate for the shortages from Vietnam, according to Rabobank. "Arabica prices have risen by 80% in the last twelve months and panic buying is taking over the market. The fact that Christmas is approaching amplifies this effect." Rabobank expects panic buying to decline again next year.
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