Food prices will not go back to pre-pandemic levels in 2022, Rabobank predicts

30 November 20213 min reading

In its newly-released Agri Commodity Markets Research Outlook 2022, Rabobank, an agribusiness banking specialist, said that it’s highly unlikely that food prices will go back to pre-pandemic levels in 2022, as commodity prices are now supported by inflation, including high shipping costs, energy and fertiliser prices, and a shortage of labor.

“2022 will bring fewer Covid-related disruptions, but when it comes to agricultural commodity prices, normalcy looks unlikely, and inflation is almost certainly not just ‘temporary’, the report said. “Any significant drop in agricultural futures prices will likely be met by significant pent-up consumer hedging, which has been restricted in this period of high prices. 2022 will start from a position of low stocks in many agricultural commodities, which should lead to heightened volatility”.

2021 has been a year of unprecedented challenges on different fronts. The world is still fighting Covid and its economic and social consequences, which are still largely uncertain. Climate has been extreme in a number of geographies, with clear adverse effects on crops, and climate change awareness is growing, potentially leading to higher demand for biofuels ahead. Generally, demand for agricultural commodities has been stellar, not always for consumption but also for ’just in case’ stocks, putting pressure on supply chains that are already stressed on a number of fronts. Inflationary pressures extend upstream to inputs, and downstream to animal protein and the general economy.


Rabobank forecasts that an element of panic buying might subside in some commodities as vaccination rates improve, Covid-related deaths go down, and lockdowns become less likely, shorter and/or less severe. With less strict social distancing measures, ports worldwide might be better able to cope with the backlog and increased demand. “However, a ‘normalisation’ of the supply chain in 2022 is unlikely and players will have to find solace in just a bit of a price drop off historical highs, and hopefully fewer booking cancellations,” the report highlights.

 “Higher farm input costs, expensive shipping and good demand provide for a grim combination. We should see these inflationary pressures upstream move along the supply chain to reach consumers in 2022, with uncertain social consequences. The proportional increase in prices on supermarket shelves will of course be much smaller, as commodity prices are usually only a relatively small proportion of the prices of final goods. But social discontent is already being felt in a few countries and more is likely to come in 2022.”

Rabobank says that the weather will likely continue to be adverse next year. “The last time agricultural commodity prices were this high was in 2012, after two consecutive La Niña events (between mid-2010 and mid-2012). La Niña is clearly a bullish influence, as it correlates with dryness in Argentina (already present in the last few months), the south of Brazil and the southern part of the US.” 

“In the short term, however, the risks are salient: low stocks in a number of commodities will make it hard to absorb further supply shocks, resulting in demand being rationed,” the report warned.

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