Coface Group


Latin America
Northern America
Central & Eastern Europe
Western Europe
Emerging Asia
Middle-East & Turkey
Change sector


  • Likely long-term upward trend of prices.
  • Demand benefiting from household consumption in emerging countries.


  • Sector subject to climatic hazards.
  • High cereal stocks.

Risk assessment

Trends in agricultural commodity prices

Trends in agricultural
commodity prices,
(Jan 2016 = 100)

After reaching a ten-year record low in January 2016, the FAO agricultural commodities price index gained +15% in 2016. The overall positive change in agricultural commodities prices, except for the change in cereal prices (-5%), helped boost this index over the year.

Cereal production continued to outpace demand in volume over the year. Stocks still represent more than one-fourth of global demand in 2016, weighing heavily on cereal prices. Meat prices (the smallest increase since January at +11% in 2016), like cereal prices, were -23% lower (-24% for cereals) than their levels two years ago. Demand for meat remains weaker due to the gradual decrease in its consumption in developing countries.

The prices of milk (+28% in 2016) and oils (+26%) firmed up greatly in 2016. Powdered milk and butter prices increased sharply due to a stronger import demand from the markets of the Middle East, North Africa, and China, combined with a limited supply from New Zealand. As for oil prices, their growth came notably from lower palm oil production in Southeast Asia.

Sugar prices have seen the largest annual increase (+44%), stemming particularly from the +22% appreciation of the Brazilian real against the dollar between January and November 2016.


Overall production of agricultural commodities in 2017 should be greater than last year. While production is dependent on climate conditions, El Niño is not expected in 2017.

In Southeast Asia, although the major droughts of 2016 should continue to affect palm oil production in 2017, this production should still grow by 9% (rebound after a 5% decline in 2016). Nevertheless, despite this rebound, stocks should represent 17% of global demand in 2017 (20% in 2015). Prices should therefore remain up during the first half of 2017. The weak growth in global sugar supply expected in 2017 (+1.1%) is related to the second consecutive decline in production expected in India (-8%, number 2 producer in the world). The two years of below-normal monsoon conditions continue to keep Indian sugar cane yields below normal levels. 

In North America, the United States, the top soy and corn producer, should see its cereal production increase by +6.6% and 8.5% respectively in 2017. The US agricultural industry should be bolstered by an advantageous “farm bill” (equivalent of the European CAP). Donald Trump has announced that his administration will be “pro-agriculture”.

In South America, the overall sector should be favoured by the gradual decline in interest rates on loans associated with controlled inflation and by the appreciation of South American currencies, which could lead to a decrease in the prices of certain inputs.

In Western Europe, the EU’s sugar market will be liberalised starting on 1 October 2017. After a 22% decrease in production in 2016, it is expected to increase by 10% in 2017. The end of quotas could allow European sugar prices to be indexed to global prices. While this would favour European beet producers (9.3% of global production in 2017) as things currently stand, the absence of the EU’s safety net could lead to further rationalisations within the industry. The recent rains in certain parts of France, Russia, and Ukraine have resulted in significant damage to the quantity and quality of harvested wheat. European production should thus shrink by 11% in 2017 to 141 million tonnes (the lowest level since the 2013 harvest). Lastly, according to the INSEE, the net income of French farmers fell 16% in 2016, given the levels of milk, meat, and cereal prices. Although the slow but gradual increase in milk prices should be favourable for dairy farmers in 2017, the meat and cereal sectors should not see any improvement in 2017. An increase in bankruptcies is likely.


Demand for agricultural commodities is likely to remain firm in 2017, given the predicted increase in global population. 

In Asia, the food sector remains buoyant despite the Chinese slowdown. The outlook for rice consumption (+1.8% year-on-year in 2016/2017 – hereafter 2017 – the reference year running September to September in line with the harvesting season) has been sustained by demand from the Asian continent. Rice consumption in China, India, and Indonesia, (60% of global consumption) is likely to grow by +1.4%, +4%, and +1.4% respectively year-on-year in 2017 according to the EIU. Still for cereals, there ought to be vigorous growth in the Chinese demand for corn (+4.7% year-on-year in 2017), which accounts for 22% of global demand. The increase in soybean prices is good news for China, the world’s top consumer (30.5%), whose demand is stimulated by the vigorous growth in aquaculture farms (62% of installed capacity worldwide, according to the FAO). According to the EIU, growth was +6% year-on-year in 2017 in China, i.e. a higher-than-average growth in global consumption of soybeans (+4.4%) over the same period.

In North America, demand for corn (the most-consumed cereal in the world and mainly produced in the United States), 60% of which is used to produce animal feed, 30% goes for industrial processing (ethanol-fuel and starch), and 10% is consumed directly as food, is expected to increase by 3.3% in 2017. For the first time, total annual demand should exceed 1 billion tonnes in 2016-2017. The continuation of the Russian food import embargo of 15 February 2016 against US soybeans and corn should have a relatively modest impact on the US sector. 

South America is one of the regions that should experience strong growth in demand for soybeans according to the USDA (+3.3% on average) in 2017, especially Brazil and Argentina. These two countries together consume as much as China, i.e. 30% of global consumption, and use it mainly for animal feed.

In Western Europe, wheat consumption in the European Union (EU, the largest consumer of wheat with 17% of global consumption) should decrease by -1% in 2017. Lastly, the agri-food sector as a whole will probably remain weakened by the Russian import embargo on foodstuffs from the United States and the European Union (fruit, vegetables, meat, poultry, fish, milk, and dairy products), which was extended until the end of 2017 by Vladimir Putin in July 2016.


Last update : December 2016

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