The December AMIS Market Monitor highlights both the current stability in the grain market and the challenges ahead. While there is relative calm compared to previous years, ongoing and future shocks—whether from climate, geopolitical tensions or trade policies—will continue to shape market dynamics, potentially destabilizing food security worldwide.

Global prices for key AMIS (Agricultural Market Information System) crops—wheat, maize, rice, and soybeans—are currently lower than they were a year ago, signaling a relatively stable global market. According to the December AMIS Market Monitor, the maize subindex has decreased by 1.5%, while wheat and rice prices have fallen by around 10%, and soybean prices have dropped by nearly 20%. This price reduction suggests market stability, but uncertainties persist, especially concerning potential shifts in U.S. trade policies and responses from trading partners, as noted in the AMIS report.

Global agricultural markets experienced a relatively calm year compared to the unprecedented disruptions caused by the war in Ukraine just two years ago. The AMIS report highlights that price fluctuations this year have been largely attributable to developments in the underlying market fundamentals. Although some regions faced unfavorable weather conditions, these were offset by more beneficial conditions elsewhere, allowing for a relatively stable global output of AMIS crops.

As the AMIS report further explains, wheat, maize, rice, and soybeans are cultivated globally, benefiting from production cycles in both the northern and southern hemispheres. These cycles enable farmers to quickly respond to price signals in global markets. However, commodities such as cocoa, coffee, and olive oil—produced in geographically concentrated regions—saw significant price hikes this year due to their vulnerability to supply shocks, as detailed in the AMIS monitoring.

SHIPPING DISRUPTIONS IN PANAMA CANAL AND RED SEA ALTER GRAIN TRADE LANDSCAPE

Trade remains a vital vehicle for moving goods from surplus to deficit regions, yet it faces frequent obstacles, including government-imposed restrictions and disruptions to logistics and shipping systems. The AMIS report notes that over 80% of world trade in grains and oilseeds is conducted via maritime routes. In 2024, the Panama Canal and Red Sea became focal points of disruption, altering the trading landscape. Low water levels in the Panama Canal and political instability in the Red Sea led to shipping restrictions, longer cargo travel distances, and rising trade costs, including insurance premiums. The AMIS report states that despite these disruptions, the situation in the Panama Canal has now normalized, with full capacity restored. However, the volume of vessels passing through the Red Sea dropped significantly in November 2024, with only 20 to 25 vessels passing through compared to 70 to 75 in November 2023. Despite these increased costs and extended travel times, food availability has not been significantly impacted, as noted in the AMIS report’s overview of global trade.

Inland disruptions, such as low water levels in the Mississippi River and extreme weather events like the May 2024 floods in Brazil, have also posed challenges to logistics and transportation in key agricultural exporting countries. 

CLIMATIC ANOMALIES AND GEOPOLITICAL TENSIONS POSE RISKS TO FOOD SECURITY

As 2024 closes, global agrifood systems remain vulnerable to shocks from various factors, including climatic anomalies, rising geopolitical tensions—particularly in the Near East—economic setbacks, and policy changes. According to the AMIS, these factors have the potential to disrupt the balance between supply and demand, which could further strain food security outcomes worldwide.

The AMIS report emphasizes that the impact of rainfall distribution and extreme weather events, including rising global temperatures, will affect crop yields and production levels. Additionally, government policies regarding trade, biofuels mandates, and other factors will continue to shape market dynamics. The report further suggests that export restrictions, subsidies, and other trade-distorting measures can significantly impact global supply and demand, with potentially destabilizing effects.

It is essential for countries to avoid implementing such restrictive measures, as highlighted in the AMIS report, because they generally result in increased price volatility and market uncertainty. The report also underscores that global economic conditions, including inflation and currency fluctuations, will play a crucial role in shaping market trends moving forward.