The World Bank projected Thursday that agricultural commodity prices will drop 7% this year and likely fall again in 2024, providing some relief from global food inflation.

In its latest commodity markets outlook, the bank estimates that corn prices will be down more than 15% this year and another 11% in 2024. Wheat prices are expected to decline more than 17% this year from 2022 and nearly 6% more in 2024. Prices for soybeans and soybean oil also are expected to be down sharply this year.

The bank projects that world food prices will fall 8% this year and another 3% in 2024, assuming grain continues to flow from the Black Sea region.

However, that projected easing in inflation is not likely to have a significant impact on food inflation, given that food prices are still at their highest level since 1975 with the exception of last year. The report estimates 349 million people globally will be food-insecure this year, twice as many as in 2020. Some 100 million people in sub-Saharan Africa face "acute food insecurity," the report says, primarily in east and southern Africa. 

“The surge in food and energy prices after Russia’s invasion of Ukraine has largely passed due to slowing economic growth, a moderate winter, and reallocations in the commodity trade,” said Indermit Gill, the World Bank’s chief economist and senior vice president for development economics. 

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“But this is of little comfort to consumers in many countries," he continued. "In real terms, food prices will remain at one of the highest levels of the past five decades. Governments should avoid trade restrictions and protect their poorest citizens using targeted income-support programs rather than price controls.”

The report notes that the projected declines in grain prices are coming off historically high levels. 

The bank’s grains price index declined nearly 5% in the first quarter of the year but is still above the pre-pandemic average from 2015 through 2019. While wheat and corn prices fell 8% in the first quarter, the price of wheat was still double what it was before the pandemic and corn prices were 80% higher. 

"The forecast assumes that there are no further disruptions from the war in Ukraine, while good harvests in major grain producing countries—such as Australia, Canada, Russia, and the United States—contribute to lower prices," the report said.

Similarly, the bank's index for oils and meals is still 52% above its pre-pandemic level despite sharp declines in the prices of some oils this year.

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