World Bank projects a modest 2% decline in agricultural prices in 2026, with supply keeping pace with demand and balanced risks. | © Shutterstock.com
The World Bank Group’s agricultural price index is projected to slip by about 2 percent in 2026. Food and agricultural raw material prices are expected to hold broadly steady as supply growth keeps pace with demand, while beverage prices are projected to fall by around 7 percent as supply expands. Overall, risks to the commodity price outlook are fairly balanced. On the upside, extreme weather; easing trade tensions affecting several U.S.-benchmarked commodities (especially soybeans); and higher input costs (notably natural gas for fertilizer production) could push prices higher. On the downside, softer biofuel demand and slower global growth may put downward pressure on prices.
Global growth
The agricultural price forecasts assume global economic growth will ease to 2.6 percent in 2026, down from 2.7 percent in 2025. This modest decline highlights the global economy’s resilience to heightened trade tensions and policy uncertainty, supported by inventory buildups, strong risk appetite, and investments in artificial intelligence. However, risks to the growth outlook remain tilted to the downside. Weaker-than-expected global activity would dampen commodity demand and put downward pressure on food prices—particularly edible oils and beef, which tend to be more sensitive to global economic conditions than other food commodities.
U.S. dollar movements
Movements in the U.S. dollar will continue to shape commodity prices. The dollar depreciated by about 6 percent against a basket of major currencies in the first half of 2025 and has since stabilized. Because most commodities are priced in dollars, a weaker dollar generally supports higher dollar-denominated commodity prices, while a stronger dollar tends to weigh on them.
Monetary policies
Monetary policy will also influence commodity price dynamics. The federal funds rate (set by the U.S. Federal Reserve) declined from 5.3 percent in 2024 to 3.6 percent by end-December 2025. Lower interest rates generally support commodity prices by encouraging investment flows, reducing financing costs, and—indirectly—putting downward pressure on the U.S. dollar. As a result, both the pace and scale of future policy moves are expected to be key drivers of commodity price dynamics.
Trade policies
Shifts in trade policies and tariffs among major economies triggered sizable commodity price swings in 2025. Most notably, renewed tensions between the United States and China widened price gaps and intensified trade diversion in global soybean markets in the second half of the year, before easing in late 2025 helped narrow those gaps. A flare-up of similar trade tensions could again disrupt commodity markets.
La Niña intensity
The baseline agricultural price forecasts assume a weak short-lived La Niña. If La Niña turns out to be stronger or more persistent than expected, it could bring hotter and drier-than-normal conditions to key agricultural regions—including Argentina, southern Brazil, and the U.S. Gulf Coast. Such weather could disrupt production of major crops such as maize, wheat, and soybeans, pushing prices above current forecasts.
Input costs
Fertilizer prices jumped by 18 percent in 2025, fueled by strong demand, trade restrictions, and production shortfalls. Looking ahead, prices are projected to fall by about 5 percent in 2026, assuming China continues to relax export limits on nitrogen and phosphate fertilizers—a shift that began in September 2025. This outlook, however, remains vulnerable to setbacks. A reversal of export easing, higher natural gas prices, or stronger-than-expected demand could keep fertilizer costs elevated and push food prices above current forecasts.
Biofuel demand
The growing conversion of food commodities into biofuels is increasingly shaping agricultural markets. In 2025, edible oil prices were supported by stronger domestic use as biodiesel feedstocks, driven by higher blending mandates in Brazil, planned increases in Indonesia, and the expiration of U.S. tax credits for imported biofuels. This support is expected to persist, but a drop in crude oil prices or relaxed blending requirements could curb demand and put downward pressure on prices.
Stabilizing prices, uncertain outlook. Ample global supplies are expected to keep food and agricultural raw material prices broadly stable, while beverage prices (notably coffee and cocoa) are projected to soften. The risks to these price forecasts are broadly balanced. Upside risks from extreme weather events, lower trade tensions involving several commodities with U.S. benchmarks (particularly soybeans), and higher-than-expected input costs, such as natural gas for fertilizers, are offset by downside risks from weaker biofuel demand and more subdued global growth.
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