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In our last post, we looked at the impact of consumption, production, and price trends on agricultural commodities, based on the OECD-FAO report titled “Agricultural Outlook 2015-2024.” We determined that over the next decade production trends would be determined by taste, preferences, and choices. This post focuses on the specific impact these trends will have on the cereals, oilseeds, and livestock sectors.

Coarse grains push up cereal production
The area under sowing for cereals is expected to stay more or less stagnant. Cereal production is forecasted to increase by 14% (see chart below) over the next decade primarily due to yield improvement. Of the three cereals, coarse grains are expected to have the highest production levels. The expanding livestock sector will fuel demand for coarse grains for end use as animal feed (growing from 36% in 2014 to 70% in 2024). Feed will account for two-thirds of the total 225 MnMT increase in coarse grain consumption. Most of this additional feed will be consumed by developing countries.


Record oilseed production driven by demand for protein meal
Demand for protein meal from an expanding livestock sector will push up production of oilseeds. Increased production will initially bring prices down. However, demand is expected to catch up with supply in the long term putting protein meal prices on an upward trajectory.

Despite a significant rise in oilseed production, vegetable oil production is not expected to see a similar rise. Countries traditionally producing high oil yielding crops such as sunflower and rapeseed will see considerably slow growth in vegetable oil production. This will be in part due to limited growth in biodiesel production for which vegetable oil is the main feedstock. This reduced growth will slow the recovery of vegetable oil prices.

Slower rate of expansion for Meat industry
Developing countries will see robust growth in total consumption of meat. Rapid population growth and urbanisation in many developing regions remain the core drivers of total consumption growth. Developed countries will see stagnation in consumption growth. However, consumption per capita of meat in developed countries is expected to remain more than double that of developing countries (68kg vs 28kg per person per year).


In the long term, real prices will fall even though nominal prices will start to rise. Compared with 2012-14, poultry meat will capture more than half of the additional meat produced globally by 2024. Production will also benefit from improved meat-to-feed price margins and better-feed conversion ratios in the next decade.

World milk production is projected to increase by 175 Mt (23%) by 2024. 75% of this production is anticipated to come from developing countries, especially those in Asia. The consumption growth rate in developing countries is higher than developed countries, which have saturated consumption per capita. Prices are expected to continue to decline in the short term though they will stabilise in the medium term.

Aquaculture will be one of the fastest growing food sectors in the next decade. For the first time, aquaculture will overtake capture fisheries as the main source of fish for human consumption. Aquaculture production will be the key driver for a 19% rise in global fish production between 2014 and 2024.


High income, population growth, and high meat prices (in the short term) coupled with high feed prices will contribute to high fish prices in the short term. In the medium term prices are expected to stabilise slightly lower than the historical average.

Parting Thoughts
Higher production in developing countries will come from higher and improved yields. These will influence the downward trend in long-term real commodity prices. Strong income and population growth will be the prime factors behind the shift in demand and preferences. Trends such as the shift in the use of coarse cereals from bio-fuels to animal feed will benefit and help stabilise the expanding and volatile livestock sector. However, compared with the last decade, the agricultural commodities market will largely be uniform in terms of production and price correction.

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