The outlook for global food commodity markets continues to be relatively favourable, with the 2026/2027 cereal production forecast to remain historically elevated, though easing from record highs.

However, market prospects remain highly contingent on weather developments, including the emergence of El Nino, volatility in energy and fertiliser markets roiled by conflict, geopolitical tensions, uncertainty surrounding trade policies and broader macroeconomic headwinds.

That's according to a new report published today (Thursday, June 18) by the Food and Agriculture Organization of the United Nations (FAO).

Worldwide harvests of wheat, coarse grains and rice are set to decline from record levels in the year ahead, but remain elevated, with supply to be buoyed by ample stocks, according to the new FAO Food Outlook.

The biannual publication provides updated market assessments and forecasts for the production, utilisation, trade, and stocks of major food commodities.

These include cereals, oil crops, sugar, meat, dairy products, and fisheries.

The new edition also provides insights into the implications of alternative fuels and clean energy regulations in international maritime shipping, the linkages between sugar prices and energy products as mediated by ethanol, fertiliser markets, and the global food import bill.

FAO chief economist, Maximo Torero said: “Agri-food systems appear robust at a production level, but risks are growing and many of them have the potential to have rapid and adverse effects for global supply and access.

Aggregate global cereal output is forecast to decline by 2% in 2026 from the previous year to almost three billion tonnes.

Utilisation is expected to continue to grow, with a 1% increase in output used for human consumption.

Per capita cereal consumption in Low-Income Food-Deficit Countries is expected to decline marginally, by 0.4%.

FAO report data

Takeaways from the commodity analyses include:

Global wheat production 2026/2027 is anticipated to dip by 3.8% to 810.9 million tonnes, due to smaller harvest among major exporting countries and regions, notably Australia, the EU, and the US, where a 21.3% decrease is currently expected;
World coarse grain production in the coming year is expected to decline by 1.2% to 1.6 billion tonnes, due to lower plantings and yields in North America, even as prospects in South America appear robust, notably for maize in Argentina;
Global soybean production in 2025/2026 is predicted to set a fresh record of 432.3 million tonnes, as continued growth in Brazil and the Russian Federation will likely more than offset anticipated reductions in Argentina, India and North America;
Global meat production is expected to rise by 1% to 391.3 million tonnes, with poultry output rising by 2.5% while bovine output set to decline;
Global vegetable oil consumption is forecast to outpace production in 2025/2026, resulting in tighter market conditions and ending stocks declining for the third consecutive season;
Global fisheries and aquaculture production is set to expand by 1% in 2026 to 200.5 million tonnes.

Shipping fuels & fertiliser markets

The International Maritime Organization’s transition toward the use of alternative fuels and energy sources can be pivotal for achieving net-zero greenhouse gas (GHG) emissions goals, but it may also have important implications for agri-food markets.

The report outlines that this is especially so in Small Island Developing States (SIDS).

The publication also offers a look at how the relationship between ethanol and sugar prices has evolved since 2012.

While short-term adjustments are limited by harvest cycles, processing capacity and contracts, production and inventories respond more gradually to expected profitability.

Another chapter examines fertiliser market trends, documenting a 20-25% drop in global fertiliser trade volumes between January and April 2026 compared to the same period a year earlier.

While there has been some recent abatement of rising prices, concerns remain for the upcoming 2026/2027 agricultural season due to stalled buying in key markets such as Europe and North America, particularly for nitrogen and phosphate.

Market conditions remain highly sensitive to developments affecting transit through the Strait of Hormuz.

Food import bill

The Food Outlook also presents FAO’s updated estimate for the global food import bill (FIB) in 2025, now estimated to have risen by 7.9% from the previous year to reach a new record USD2.22 trillion.

The increase in the global food import bill came despite declining import costs for cereals, sugar and oilseeds.

According to the FAO, it was driven by a large increase in the prices of higher-value products, notably coffee, cocoa and spices, animal products, fish and fruits and vegetables, primarily imported by high-income countries (HICs).

Food import expenditures by HICs, which accounted for more than two-thirds of the total, rose by 9.3%, compared to 4% for upper-middle income countries, 7.9% for lower-middle-income countries and 6.7% in low-income countries.

FAO’s previous analysis showed that, under high geopolitical risk, the food import bill response to a given oil price shock can be almost twice as large as under normal conditions.

Uncertainty, risk premia, insurance costs, and logistics frictions strengthen the transmission of energy shocks to food import costs.