FAO provides outlook for global grain and vegetable oil markets - EXCLUSIVE

CE Report presents an exclusive interview with Food and Agriculture Organization (FAO) Senior Economist Monika Tothova, who provides insights into current trends in global food prices, cereal stocks, and the factors shaping the outlook for 2025/26. The discussion covers the recent easing of the FAO Food Price Index, the sustainability of rising global cereal inventories, weather-related risks, the influence of biofuel demand on grain and vegetable oil markets, and the implications of these trends for food-importing developing countries.​

What are the main factors behind the continued decline in the FAO Food Price Index for the fifth consecutive month?

The FAO Food Price Index (FFPI) has continued to ease for fifth consecutive month, reflecting broad‑based declines across several commodity groups. Lower international quotations for sugar, meat and dairy products outweighed relatively contained movements in cereals and vegetable oils. Improved global supply availability, particularly for dairy and meat products, along with reduced import demand in some major markets, contributed to the easing of prices. In sugar markets, better production prospects in several key producers supported further downward adjustments. Cereal prices have shown mixed but generally stable movements. Overall, the index’s continued decline reflects a combination of ample supplies, lower import demand, and generally improved production expectations across several major food commodities.

As a word of caution: The FAO Food Price Index (FFPI) is a measure of the monthly change in international prices of a basket of food commodities, using mostly export prices. Thus, it should not be confused with developments on food prices on a retail level.

How sustainable is the projected 7.8% increase in global grain stocks, and what risks could still threaten this outlook?

FAO’s Cereal Supply and Demand Brief projects a 7.8 percent year‑on‑year increase in global cereal stocks, driven largely by expected rises in maize, wheat, and barley inventories—especially in major exporting countries. This outlook suggests a comfortably supplied market for 2025/26. As of now, the projection appears broadly sustainable given:

Favourable production prospects in several large producers and exporters.
Higher carryovers from the current season.
Expected replenishment of maize and wheat inventories in key origins.

However, several risks could still weaken this outlook, such as weather shocks, policy disruptions, shocks affecting logistics, etc.

To what extent are weather conditions in major producing countries expected to influence global cereal prices in the coming months?

Weather remains one of the most important drivers of cereal price movements, even in seasons with comfortable stock levels. However, price sensitivity to weather conditions depends on the tightness of global supplies, but weather shocks can still lead to short‑term volatility. In the coming months, for wheat, markets will closely track winter crop conditions in major Northern Hemisphere producers and the transition into spring. - For maize and soybeans in the Southern Hemisphere, planting and early‑season weather—especially in Brazil and Argentina—will be influential. - For rice, monsoon performance and water availability in Asia remain crucial variables. While higher global inventories reduce the likelihood of severe price swings, adverse weather in key producing regions can still influence futures markets, export prices, and regional supply conditions.

How might rising demand for biofuels, particularly in the United States, affect global grain and vegetable oil markets in 2025?

(presumably there was a typo in the question: should be 2026). Demand for biofuels—particularly U.S. ethanol and renewable diesel—continues to be an important structural driver of grain and oilseed markets.

The United States is the world’s largest maize producer, and higher ethanol demand translates into greater domestic maize use. When global supplies are ample, this tends to support prices modestly without causing significant tightness. However, in years of tighter balances, rising ethanol demand can reduce export availability and contribute to pressure on international prices.

Biofuel production influences vegetable oil markets through increased industrial use, particularly of soyoil. If global oilseed supplies are ample, this demand helps to maintain prices. But if production growth slows or weather problems arise, biofuel demand can become a notable bullish factor for vegetable oil prices.

What implications do the current food price and stock trends have for food‑importing developing countries?

Current global trends—namely lower or stable food commodity prices and higher projected cereal stocks—carry several potentially positive implications for food‑importing developing countries, including lower import bills as international prices ease, improved global supply availability lowering the risk of sudden price surges, and greater market liquidity from higher stocks in major exporters. Despite more favourable global conditions, many developing countries continue to face high domestic food prices, often driven by currency depreciation or local supply constraints; elevated transportation and logistics costs, which can limit pass‑through from international markets, and exposure to localized climate shocks and conflict, which may exacerbate food insecurity regardless of global trends.

Photo: Wikipedia

This interview was prepared by Julian Müller