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Informist, Tuesday, Apr. 29, 2025

 

MUMBAI – The World Bank's Food Price Index is projected to fall by 7% in 2025 and edge further down in 2026, it said in a market outlook. All three components of the index are expected to decline in 2025--grains by 11%, oils and meals by 7%, and other foods by 5%--it said.

 

The projected downturn in grain prices for 2025 is primarily driven by an expected 29% plunge in rice prices, reflecting ample supply and relaxation of export restrictions by India, according to the report. Global rice production in 2024-25 is expected to increase by 2% with production in India, which accounts for about 40% of global exports, forecast to rise by 5%.

 

In 2026, rice prices are projected to be stable, as preliminary estimates for the 2025-26 season from the International Grains Council indicate that a small increase in global supply will be matched by a similar increase in consumption, it said.

 

Wheat prices are likely to edge down in 2025-26, driven by lower demand due to trade tensions, which will partially offset tight supply conditions. A near-record wheat production is expected to be narrowly outpaced by consumption, resulting in a decline in global stocks, the report said.

 

In terms of maize, the world bank has forecast prices to fall by 2% in both 2025 and 2026 due to lower crude oil prices, and increased tariffs on US-China trade. Fall in prices of crude oil reduce demand for ethanol and thereby for maize, it said. Moreover, price advantage of maize in recent months over soybeans and wheat is likely to incentivize maize acreage expansion in 2025-26 season, which could lead to higher output and a decline in prices. However, the price decline is expected to be limited by tight inventories, projected to reach their lowest levels in over a decade, according to the bank.

 

OILS AND MEALS

 

The oils and meals price index is forecast to decline by 7% in 2025, driven by favorable global food oil supplies, before stabilising in 2026, the report said. The decrease in 2025 mainly reflects reductions in soybean and soybean meal prices. Soybean prices are projected to tumble by 17% in 2025, as global production is expected to rise by 6% to a new record in the 2024-25 season, with the stocks-to-use ratio climbing close to its 2018-19 record high, according to the World Bank. 

 

Weaker imports of US soybeans in China, amid heightened trade tensions, are expected to weigh on the US benchmark price, as China accounts for over half of US soybean exports. With the soybean-to-maize price ratio expected to favour maize acreage in 2025-26, soybean prices are forecast to stabilise next year, the report said.

 

Soybean oil prices are forecast to ease by 3% in 2025 and 2% in 2026, largely due to lower crude oil prices dampening biofuel demand. However, the downward pressure is partially offset by strong demand resulting from reduced supplies of close substitutes, such as palm oil, sunflower oil, and rapeseed oil. Soymeal prices are projected to decline by 16% in 2025, reflecting robust soybean production, it said.

 

On the other hand, palm oil prices are projected to rise by 6% in 2025, as a moderate pickup in production is insufficient to replenish low global stocks, the report said. Additionally, Indonesia's plan to increase its biodiesel mixture – from 35% in 2024 to 40% in 2025 and to 50% in 2026 — will support palm oil prices. However, the substitution of palm oil with soybean oil is likely to curb sharp price gains. 

 

At the same time, structural challenges in palm oil production, including declining yields and a slowdown in new plantings, will sustain global supply tightness and support prices. As a result, palm oil prices are forecast to increase by 2% in 2026.

 

OTHER FOODS

 

The World Bank has projected the price index for other foods to decrease by 5% in 2025 and 2% in 2026, driven by a decline in chicken prices by 4% in 2025 and 1% in 2026. Sugar prices are expected to edge down in 2025-26, with a transition to surplus conditions expected in the second half of 2025, according to the report.

 

The World Bank has forecast the agricultural commodity prices to decline by 3% next year, it said in its report. The decline could be a result of weaker-than-expected economic growth, which would weigh on agricultural commodity demand, it said.

 

TEA AND COFFEE

 

The World Bank has forecast tea prices to decline by 18% in 2025, driven by a modest recovery in supplies from South Asia and East Africa. Tea prices are expected to rebound by 12% in 2026.

 

In terms of coffee, Arabica prices are projected to climb by more than 50% on year in 2025, assuming prices remain broadly stable for the rest of the year before declining by 15% in 2026. Higher production expected by Colombia, the world's second-largest Arabica producer, could lead to fall in prices, the report said.

Robusta prices are expected to rise by nearly 25% in 2025 before falling by 9% next year. Low rainfall and above-average temperatures earlier in the year could negatively affect the 2025–26 harvest in the world's leading coffee producer Brazil, and support prices.

 

COTTON AND RUBBER

 

Global cotton production is projected to increase by 7% this season, with substantial gains in Brazil, Turkey and the US averaging about 15% higher than a year earlier in the first quarter of 2025, the report cited data from the US Department of Agriculture. The agricultural raw materials price index is projected to decrease further throughout 2025 before stabilising in 2026, with weaker-than-expected global growth posing a key downside risk.

 

Natural rubber prices are projected to rise by 14% in 2025 on year and post a moderate decline in 2026 as production recovers, the World Bank said. However, downside risks to the outlook remain, particularly from a potentially steep slowdown in the growth of global automobile production, especially if recently imposed trade measures significantly dampen automotive demand coupled with pre-existing oversupply in China's auto sector, the report said.  End

 

Reported by Taniva Singha Roy

Edited by Deepshikha Bhardwaj

 

 

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