Food Prices Will Stay Near 10-Year High in 2022, Rabobank Says
Food prices are likely to stay near record highs next year due to consumers stocking up, high energy and shipping prices, adverse weather and a strong dollar, according to Rabobank.
“Inflation in this space is almost certainly not just ‘temporary’,” analysts led by Carlos Mera wrote in a report. Next year “will likely bring fewer Covid-related disruptions, but when it comes to agricultural commodity prices, any sense of normalcy looks unlikely.”
A United Nations index that tracks staples is at a decade high as the food supply chain has been hit by bad weather, supply disruptions and labor shortages. That’s spurred inflation around the world, causing a headache for central bankers and governments.
Disruptions and prices should ease next year, but only slightly, Rabobank said, adding that high costs of food may lead to social upheaval. “Social discontent is already being felt in a few countries, and more is likely to come in 2022.”
Rabobank is most bullish on sugar, cocoa and corn, compared to current prices. It sees energy prices supporting corn and sugar in 2022. Millers in top exporter Brazil can choose to make either sugar or ethanol from cane, and “given that the sugar market cannot afford a larger deficit, sugar will have to match any potential rallies in ethanol,” the analysts wrote.
Wheat prices are expected to continue to climb in the first half of the next year, before subsiding in the second half as demand for feed wheat drops. A slump in cocoa production due to poor weather will support the market, they wrote.
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