FAO and OECD expect a price shock for agricultural commodities in the 10-year outlook

A large supply and declining consumption during a global recession could lead to a shock in the agricultural commodities market. This is the result of a joint study by the FAO and the OECD.
A macroeconomic shock, caused, among other things, by the corona pandemic, is putting agricultural commodity prices under pressure. The shock could have historical dimensions.
An economic downturn caused by the corona virus pandemic could hit the demand for agricultural commodities hard and in the short term cause the price collapse to an unprecedented extent.
The impact of vegetable oils and meat products is likely to be greater than that of staple foods such as rice and wheat.
These forecasts are part of a report for the next ten years that the US organizations FAO and OECD have written and published today. For the first time, this also includes possible consequences for the post-corona period.
The virus that causes the COVID-19 disease has already led to price drops for some agricultural commodities, such as corn, where prices have dropped to a 10-year low. Restaurants were closed and fuel consumption decreased.
After the lockdowns have been eased again, prices have partially recovered. However, traders fear that the demand situation will remain uncertain because the virus is spreading further.
The two organizations estimate that prices could recover to an average level, so that there is only a slight decline in prices between 2020 and 2029. Better grain yields can keep pace with the demand of an increasing global population. This has a long-term impact on price developments.
Meat prices, especially pork, are likely to decline particularly sharply if the consequences of African swine flu in Southeast Asia become manageable.

Hansa Terminhandel GmbH
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