Rebound in Food Prices Sparks Trade Uncertainty for Consumers
Global food prices are rising again, raising concerns about grocery costs and potential trade disruptions as the market braces for changes
Food Prices, Trade Uncertainty, Donald Trump, US, China, Agriculture
Bloomberg: A rise in global food prices is making grocery shopping a bit tougher this year. It’s happening just as the agricultural sector is getting ready for possible trade issues.
The United Nations reported that food commodity costs went up nearly 7% last year, marking the first increase in three years. While it might take a while for these changes to hit supermarket shelves, shoppers are already feeling the pinch from ongoing inflation.
Weather can be unpredictable, and this year might be even more uncertain with Donald Trump back in the White House. He’s suggested tariffs on imported goods, and it’s unclear how this could affect trade, especially with China, and in turn, food prices.
Monika Tothova, an economist at the UN’s Food and Agriculture Organization, mentioned that the future of policy is uncertain. Factors like weather, global politics, and economic policies will play a big role in food prices moving forward.
Even though the FAO’s food price index dipped a bit in December, it’s still close to the highest levels since April 2023. Last year, rising costs were mainly due to vegetable oils, dairy, and meat, while grain prices were more stable.
Looking ahead, Tothova thinks we might see similar trends in vegetable oils and grains this year. However, prices for meat and dairy could drop unless there are major animal disease outbreaks.
Rabobank recently predicted that the palm oil shortage could last into 2025, which would keep prices high. They also expect a wheat deficit, despite good supplies of corn and soybeans.
For now, everyone is waiting to see what the US trade policies will look like once Trump takes office later this month.
Rabobank analysts noted that the new US administration’s policies and how other regions respond, especially China and Europe, will significantly impact the outlook for 2025. They warned that farmers and food processors might face tighter margins depending on the situation.