The monthly World Bank (WB) Food Security Report offers a comprehensive global overview of agricultural commodities, including current trends and future expectations for the global agricultural market. Compared to May’s edition, the Bank noted a deceleration in agricultural, cereal and export prices in June 2024, which decreased to -8% M-o-M, -10% M-o-M and -9% M-o-M, respectively. However, the Bank observed significant domestic inflation still present in low- and middle-income countries.

• The M-o-M decrease in the export price index was driven by a -16% M-o-M decline and -11% M-o-M in cocoa and cotton prices, respectively.
• The report highlighted the preliminary forecasts for global cereal production published in May, which pointed out the considerable uncertainty on cereal due to the impending planting of numerous crops in the Northern Hemisphere.
• Furthermore, the Bank reviewed the projections for wheat (a major cereal crop) production in 2024–2025, noting that unfavourable weather conditions, including drought and extended frost in some key regions in Russia, pose a threat to yield expectations.
• As a result, growing concerns about production constraints, particularly in the Black Sea region, drove wheat export prices globally in May.  
• Meanwhile, corn prices increased for the third consecutive month, primarily due to wheat's spillover effects and production uncertainty.
• Due to wheat's significance as a staple grain with limited alternatives, the Bank stressed that importing countries are observing developments for any potential impact on food security.
• With respect to rice production, initial projections see rice output reaching a new peak in the 2024–2025 farming season, rising by 0.9% Y-o-Y owing to increased plantings and higher yield.
• Furthermore, the Bank expects soybean production to hit a record level in 2024-2025, supported by expanded cultivation areas in Argentina, Brazil, and the United States.
• However, the report noted that improved production is only possible under continuous favourable weather conditions.
• In Nigeria, the Bank pointed out that security challenges in food-growing regions primarily drove the rising prices of food items. Other notable factors include shocks from economic reforms and extreme weather conditions.
• Excluding a brief moderation in Dec 2022, Nigeria’s food inflation has continued to trend upward since Feb ‘22 and has been the primary driver of the country’s rising inflationary trend.
• The NBS inflation report for May 2024 showed that food prices increased by +13bps to 40.66% Y-o-Y, up from 40.53% Y-o-Y in April.
• Despite the government’s recent efforts to boost domestic agricultural production, we still expect food prices to remain relatively high in the near term, reflecting supply constraints in the food sector caused by ongoing security concerns.
• We also anticipate that food prices will rise due to the Naira's depreciation and high input costs.