Global grain prices to drop by 5% amid market shifts: AFEX 2025 Outlook

NIGERIA – AFEX, a leading commodities market player, has reported significant shifts in global commodity markets, predicting a 5% decrease in grain prices and a 4% drop in oils and meals for the 2025 trading year.

According to the AFEX Annual Commodities Review and 2025 Outlook Report, this projection offers some relief to global markets that have faced prolonged periods of price volatility and inflationary pressures.

The report highlights that the year 2024 saw global inflation decline significantly, nearing central bank targets and alleviating long-standing economic concerns. Despite this, commodity markets experienced notable volatility, with overall prices falling by 3% but remaining approximately 40% higher than pre-pandemic averages.

Agricultural commodities, particularly wheat, maize, and soybeans, stabilized following years of extreme fluctuations.

Global maize production reached a record 1.13 billion metric tons in the 2023/24 season, a 6% year-on-year increase. The surge in supply was largely driven by a 12% yearon-year increase in maize production in the United States and an impressive 47% rebound in Argentina.

These production gains were supported by favourable weather conditions, including adequate rainfall and mild temperatures, which boosted yields across major producing regions. This surge in supply led to a 25% decline in maize prices.

Similarly, global rice production grew by 1%, reaching a record high despite disruptions in major markets. However, paddy rice prices rose by 6% during the year, driven by India’s export restrictions, seasonal supply tightness, and the adverse impacts of El Niño on global rice production

El Niño was a major disruptor in the 2023/24 global rice market, causing significant shifts in production and trade dynamics. India, the world’s largest rice exporter, saw production fall from 135.5 million metric tons in 2022/23 to 128 million metric tons in 2023/24 due to weather-related yield losses.

In October 2024, India lifted its export ban on nonbasmati white rice, prompting an immediate reaction in global markets. Rice prices dropped by 11% that month, coinciding with the arrival of new harvests from major exporting countries.

Soybean prices fell by 23% in 2024, the steepest annual decline in two decades, due to expanded supply from Brazil and Argentina.

Brazil, the world’s largest soybean exporter, recorded its second-largest harvest on record despite weather-related challenges, while Argentina saw a strong recovery following the previous season’s severe drought.

Despite the overall decline, soybean prices experienced two notable rebounds. In May, prices rose by 3% due to severe flooding in key producing regions of Brazil, which temporarily disrupted production and fuelled market concerns.

Similarly, a 13% price surge in September was triggered by dry weather across South America, which impacted critical waterways in the Amazon Basin, raising fears of logistical disruptions.

Global soybean trade also saw significant shifts. U.S. soybean exports to China fell to a four-year low during the 2023–2024 marketing season as China intensified efforts to reduce dependence on U.S. imports.

Sorghum prices also declined by 25%, returning to pre-Russia-Ukraine war levels, driven by increased global supply and improved yields in major producing regions like Mexico.

Market volatility shape commodity trends in Nigeria

According to AFEX, Nigeria’s economy faced significant challenges in 2024, with record-high inflation and a volatile exchange rate straining economic growth.

Headline inflation reached 34.8% in December, with food inflation soaring to 39.8%. The agricultural sector, contributing 28.65% to GDP, saw a 270% increase in export earnings, driven by currency devaluation rather than increased export volumes.

However, the sector remained vulnerable to climate shocks, insecurity, and low productivity, with severe flooding impacting nearly 30 states and devastating thousands of hectares of farmland.

As a result, Nigeria’s domestic commodity markets experienced sharp price spikes and heightened volatility in 2024. Maize prices surged by 92%, reaching NGN660, 000 (US$419) per metric ton, while soybean prices soared by 133%, surpassing NGN1, 000,000 (US$635) per metric ton.

The poultry industry was significantly impacted by these price hikes, driving up the costs of chicken and eggs.

In terms of trading activity, a total of 37,000mt of maize was traded on the AFEX Exchange, accounting for 50% of the exchange’s total traded volume for the year.

Paddy rice prices increased by 90%, driven by supply constraints and sustained demand pressures. By the end of the year, prices had increased by 90%, with the average price reaching NGN716, 000 (US$455) per metric ton and peaking at NGN850, 000 (US$540) per metric ton.

This sharp rise reflected tight market supply and mounting pressure as demand for rice consistently outpaced availability. Sorghum prices also surged by 92%, reflecting rising demand and a supply deficit.

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