Food price inflation to ease next year - Rabobank

Consumers can expect some relief from food inflation next year, with the price of key staples such as sugar, coffee, corn and soybeans set to ease as supplies adjust higher in response to three years of soaring prices, Rabobank said in a report.

The specialist food and agribusiness bank said food demand will nonetheless remain weak as consumers continue to deal with economic challenges, including high overall inflation and interest rates.

And not all food staple prices will ease. Rabobank expects wheat, which the developing world is particularly dependent on, will record its fifth successive deficit thanks to adverse weather and potential restrictions on Russian exports.

"It won't be plain sailing but the more positive outlook for a majority of commodities should, in most countries, lead to a fall in the price of food on consumers' plates," said Carlos Mera, head of agri commodities at Rabobank.

He said winners and losers will emerge, and that those in the bakery, dairy and animal protein sectors will be the biggest beneficiaries of improved supplies from South America.

Rabobank expects the coffee market will record a 6.8 million bags surplus in 2024/25 thanks to improved output in Brazil and Colombia, while sugar will ease thanks to improved conditions in Thailand.

It also sees Brazil producing a record 163 million metric ton soybean crop.

In terms of wheat however, Rabobank warned that Argentina and Australia's output will likely underperform in the next few months, while the war in Ukraine will continue to lead to a shrinking exportable surplus next year.

Questions remain also over export restrictions for Russian wheat even as the country's crop is expected to stay above 87 million tons, the bank noted.