Posted on May, 4, 2025 at 10:00 pm
You may have noticed the news headlines on Friday, March 2, about global food prices rising. These headlines weren’t necessarily about retail food prices but the mild uptick in the FAO’s global Food Price Index – a measure of the monthly change in international prices of a basket of agricultural commodities.
The Index lifted by 1% in April 2025 from the previous month to 128 points. This is up 8% from the same period last year but still 20% down from its peak in March 2022, a month after Russia invaded Ukraine, leading to a surge in grains and oilseeds prices.
The mild uptick in the prices of grains, dairy, and meat has underpinned the Index’s mild increase in recent months. In the case of dairy and meat prices, there is a rise in demand, particularly in the EU area, combined with tight supplies in some places that have struggled with animal diseases. These will likely be temporary and generally mild as the supplies recover in the coming months.
In the case of grains, the price increases reflect the tighter supplies in the Black Sea region. But this, too, may be short-lived as the general production outlook is optimistic. For example, the International Grains Council forecasts the 2025-26 global grain production to be 2.4 billion tonnes, up 4% from the previous year. This forecast comprises all major global soft commodities – maize, wheat, rice and soybeans.
A closer look at the data shows that the 2025-26 global maize production is forecast at 1,3 billion tonnes, up 8% year-on-year. The uptick is expected to be in all major maize-producing regions worldwide.
The 2025-26 global wheat crop is forecast at 805 million tonnes, up 1% from the previous season. The 2025-26 global rice production is estimated at 540 million tonnes, up 1% from the prior season. The 2025-26 global soybean crop is estimated at 428 million tonnes, up 3% from the previous season.
Admittedly, it is still too early to be confident about these crop prospects, and the northern hemisphere countries have recently started planting. As the season progresses, much will unfold, including whether farmers will grow all the intended areas.
Moreover, the southern hemisphere countries will only start tilling the land towards the end of the year, around October. The forecasts for this region so far are mainly based on historical plantings. What will matter the most from now on are the weather conditions. So far, the prospects remain relatively favourable for most regions; thus, the International Grains Council has maintained this broadly optimistic view of the 2025-26 global grains and oilseeds production.
The better harvests also imply that commodity prices could remain contained for some time, albeit in some cases, where their usage is high and weighing on stock-level prospects.
South African perspective
This is an encouraging outlook for South Africa’s consumer. South Africa generally imports around 1.8 million tonnes of wheat yearly, just under half of the country’s annual consumption. South Africa also imports about a million tonnes of rice, which accounts for all consumption. South Africa does not produce rice because its semi-arid environment requires more moisture.
In other grains, South Africa is a net exporter and has a favourable season in the 2024-5 season, which will cushion the country’s supplies. South Africa’s 2024-25 summer grains and oilseeds are estimated at 18 million tonnes, up by 16% from the previous season, and well above the long-term average levels.
The outlook for the 2025-26 season will be clear later in the year. Currently, we are focused on the crop in the fields. Still, we know that the International Grain Council assumes a continuation of these favourable production conditions.
Other important factors
In addition to the weather, we continue to monitor geopolitical developments and trade policy, as they typically add downward pressure on agricultural commodities when China, a major grains and oilseeds buyer, cancels orders in its efforts to source more produce from South America. This developing issue requires constant observation because it generally disrupts the grain markets.
Aside from that, the outlook for 2025-26 global grains and oilseed production remains broadly optimistic, which supports a view that global food prices may increase mildly or move sideways. Therefore, the news about the rise in global food prices should not be a worry, as it may be a temporary blip due to expected solid production.
Source: Agricultural Economics Today