After experiencing severe shocks and high volatility in the previous years, European Union (EU) agricultural markets are showing positive signs of stabilising.
Published today (Tuesday, October 8) by the European Commission, the autumn 2024 edition of the short-term outlook report for EU agricultural markets presents the latest trends and prospects for key agricultural markets.
The report detailed that agricultural markets are showing signs of stabilisation as input costs have steadily declined over the past months and food inflation has returned to a moderate rate.
The general food price environment points to possible improvements in demand for agri-food products in most sectors.
Nonetheless, the outlook remains subject to a high degree of uncertainty, linked to weather events, geopolitical conflicts and animal and plant diseases.
Food inflation has been declining, and food prices have remained relatively stable over the last months for most products, though they are on average 32% higher compared to 2020.
Adverse weather conditions have proved to be more frequent and damaging, affecting production and quality levels of major arable crops.
The EU fertiliser market is also gradually stabilising, with trade flows returning to normal and domestic production showing signs of recovery.
However, affordability remains a concern for farmers, primarily due to declining arable crop prices.
The lower crop yields in different regions of Europe in 2024 could cause cash flow issues for arable crop farmers, potentially affecting fertiliser purchases in spring 2025.
The 2024/25 EU cereal production is estimated at 260.9mt, around 7% below the five-year average, which represents the lowest production in the last decade.
This is caused by unfavourable weather conditions affecting yields and, in part, by a reduction in cultivated area due to, among other things, excessive rain disrupting planting.
The most affected crops are soft wheat and maize, while oats, barley and durum wheat production increases.
Production of protein crops increases of 12.6% year-on-year, driven by field peas and broad beans.
Animal feed consumption is expected to remain stable year-on-year, reflecting a stagnating EU animal production.
Ample availability of feed wheat provides good opportunities for domestic livestock producers to rely less on imports, given certain problems with the quality of harvested soft wheat (including lower test weight of grains).
For the remainder of 2024, a decline in the Irish milk supply is likely due to the negative effect of wet conditions on pasture carrying capacity.
EU milk supply is forecast to increase marginally in 2025. Assuming normal weather conditions, the continuous decline in the dairy herd (-0.7%) is expected to be counterbalanced by increasing milk yields (+1%).
EU meat trends
Continued structural adjustment drives a decline in EU beef production by an expected 1% in 2025.
EU per capita beef consumption dropped by 1.7% in 2024 to 9.6 kg. It is expected to decline further, by 1.2% in 2025.
EU beef production increased by 3% in the first half of 2024 year-on-year, mainly due to a significant increase of slaughtering in Italy (+9%) and Poland (+20%).
The increase may have multiple causes, such as bad grazing conditions in central Europe and a growing demand in certain export markets (Turkey).
However, by the end of 2024, beef production is expected to decline slightly (-0.5%) due to a shortage of young bovines in some EU countries (e.g. Italy and Spain).
Beef imports from Brazil decreased substantially (-15%), while imports from the UK were 0.2% down.
The main EU partners, including South American countries, find more rewarding markets in other parts of the world (e.g. the United States), thanks to a relative tight beef market at global level.
By the end of 2024 a decrease of 2% is expected year-on-year. In 2025, meat imports could further decline by another 1.5% due to an expected lower production in Brazil next year.
Overall, exports of live animals are expected to decrease by -2% in 2025 year-on-year.
The report detailed that with the expectation of a declining UK pigmeat demand in 2025, EU imports could decline by 2% in 2025.
EU sheep and goat production declined by 7.4% in the first half of 2024, year-on-year, driven by the continuous structural decline of the goat and sheep flocks, as well as unfavourable weather conditions and grass availability.
Outbreaks of diseases in herds in western EU member states might affect further the availability of animals for slaughter by the end of the year.
Overall, EU sheep and goat production may fall by 5% in 2024, despite record high prices, and be followed by a further drop of 1% in 2025.