As the calendar turns to 2025, the global agricultural markets have entered the new year with relative stability, following a calmer 2024 compared to the dramatic disruptions witnessed just two years ago due to the outbreak of the war in Ukraine. The Agricultural Market Information System (AMIS) has reflected on the agricultural landscape in 2024 and highlighted key drivers to watch for in 2025 in a recent publication.
In 2024, global markets for major food commodities such as wheat, maize, rice, and soybeans remained relatively stable. This stability was largely due to favorable weather conditions in some regions that offset adverse weather elsewhere. While weather challenges impacted certain areas, overall, the global output of AMIS crops (wheat, maize, rice, and soybeans) stayed consistent. These crops benefit from being cultivated in both the Northern and Southern Hemispheres, allowing farmers to respond quickly to price signals in international markets. However, other food commodities, such as cocoa, coffee, and olive oil, which are produced in more geographically concentrated regions, saw significant price hikes due to vulnerability to supply shocks.
“Compared to just two years ago, when the outbreak of war in Ukraine delivered an unprecedented shock to all sectors of the global economy including agriculture, global markets for basic food commodities remained relatively quiet in 2024,” the AMIS article states.
Despite the overall stability in production, trade has faced challenges. AMIS highlights two major disruptions that affected global trade routes in 2024. The first was the low water levels in the Panama Canal, which caused delays and extended cargo travel distances. This, in turn, led to an increase in greenhouse gas emissions and escalating trade costs. The second disruption occurred in the Red Sea region, where political instability resulted in a significant decrease in the number of vessels passing through the area. “Only 20 to 25 vessels passed through the Red Sea in November 2024, compared to 70 to 75 in November 2023,” the report explains.
While these disruptions posed logistical challenges, AMIS notes that food availability has not been significantly impacted. However, the article highlights the vulnerability of inland waterways, particularly in agricultural exporting countries like the United States, where low water levels in the Mississippi River have caused similar challenges. Extreme weather events such as floods in Brazil in May 2024 have also posed a threat to transportation infrastructure.
LOOKING AHEAD TO 2025
Looking forward to 2025, the global agri-food system faces continued vulnerability to shocks caused by climatic anomalies, geopolitical tensions, and economic factors. AMIS warns that rising geopolitical tensions, such as those in the Near East, and disruptions in other global markets could weaken food security. “The impact of rainfall distribution and extreme weather events, including increasing global temperatures, will be felt on yields and production levels,” the article notes.
In addition, government policies related to trade, biofuel mandates, and other factors will continue to influence market dynamics. AMIS stresses the importance of avoiding export restrictions and other trade-distorting measures, which can increase price volatility and market uncertainty. Global economic conditions, including inflation and currency fluctuations, are also expected to play a role in shaping agricultural market trends in 2025.