Agricultural commodity prices look set to fall this year and stabilise in 2010, according to the Economist Intelligence Unit (EIU).
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A report by the EIU released yesterday (5 March) showed that weaker demand, ample supply, lower global trade levels and difficulties raising finance keep prices at relatively low levels.
For much of 2008 prices were falling, and the EIU said it expects its food, feedstuffs and beverages (FFB) index to continue this trend in 2009.
The cocoa market is expected to return to surplus in 2009/10. This, together with weaker demand for chocolate confectionery, particularly in the developing world, suggests that prices will fall, the EIU added.
Grains prices are expected to recover from recent lows over the course of this year as it becomes increasingly clear that official policies are going to remain supportive of biofuel development, notwithstanding lower hydrocarbon prices, the report said.
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By GlobalDataSugar prices are expected to rise “moderately” over the forecast period, largely owing to sustained demand from the biofuels sector and from self-sufficient and surplus-producing countries.
“Generally good supply prospects and weaker demand underpin our forecast of relatively little recovery in the prices of agricultural commodities in 2009,” the EIU said.
“Furthermore, we expect prices broadly to stabilise at these lower levels in 2010 as weak global economic conditions persist. However, global stocks are at historically low levels and any unforeseen disruptions to supply of individual commodities could therefore send prices higher.”
