The effects of La Niña will no longer be noticeable by before the end of 2025
The ENSO phenomenon has entered a neutral phase since the beginning of 2025. Forecasts from the World Meteorological Organization (WMO) and Columbia University suggest that a neutral state is the most likely scenario for the entire year. Observations from the National Oceanic and Atmospheric Administration (NOAA) confirm the continuation of this neutral phase throughout 2025, although a possible return of La Niña is anticipated in Q4.
The weather disruptions (droughts, torrential rains, hurricanes) that have marked the past five years are expected to continue to fade throughout the year. This neutral phase should bring a semblance of meteorological normality, sparing many agricultural regions from significant crop damage – for example, hurricane-related losses in Florida’s citrus plantations along the Gulf of Mexico.
Global cereal surplus eradicates recent supply uncertainty
According to FAO forecasts, global cereal production is expected to grow by 2% year-on-year (y/y) in 2025 (following zero growth in 2024) to reach 2,911 million tonnes this year, thereby surpassing the previous record set in 2023 (2,856 million tonnes). With demand remaining stable (2,733 Mt, +0.5%), supply is expected to be in surplus over the coming year. Wheat, maize, and rice production will contribute positively, driven by expansion in cultivated areas and particularly favourable yield forecasts. Regional distinctions are expected to be significant. Europe is likely to experience a mixed situation, with improved wheat harvests but weaker maize production prospects. Latin America and Asia will be key regions driving the increase in cereal supply, especially due to rising maize and soybean production. In contrast, North America faces more uncertainty, with a slight decline in wheat output expected, particularly in the US.
In the European Union (EU), after posting a sharp decline in 2024, cereal production is expected to rebound in 2025, thanks to favourable rainfall and sowing conditions in France, Spain, and Italy during the first half of the year. However, above-average summer temperatures in these same countries could negatively impact maize yields. The EU’s introduction of customs barriers on Russian and Belarusian fertiliser imports since 1 July may also affect European cereal producers’ supply chains and production costs.
Across the Atlantic, wheat production prospects are mixed. In Canada, output is expected to remain close to last year’s levels. In the US, however, wheat production is projected to decline slightly (3% y/y) due to persistent drought concerns. In contrast, secondary cereal crops (maize, soybeans) are expected to grow in the US, with the FAO estimating a 5% increase in sowing compared to 2024.
In Asia, hot and dry weather in India has led to downward revisions in national production forecasts. However, according to the USDA, widespread irrigation has mitigated the impact, and 2025 is expected to be a record wheat harvest year. In the Middle East, geopolitical instability continues to pose risks. Potential disruptions to maritime traffic through the Strait of Hormuz could jeopardise fertilizer supplies for Asian countries in the 2026 season. Nations like India are particularly dependent on fertiliser imports from Gulf countries transiting through the strait.
In the Southern Hemisphere, the 2025 harvests of secondary cereal crops are under way. Overall, maize production has exceeded last year’s levels and the five-year average. In Brazil, favourable price expectations have supported an estimated increase in planted areas, and generally good weather conditions should allow for modest yield improvements. In Argentina, maize production forecasts are up thanks to favourable rainfall, though output will likely remain below the five-year average. In South Africa, cereal harvests are expected to improve in 2025 on back of favorable weather conditions, in the wake of a drought-affected 2024 season.
Supply deficit will continue to weigh on the non-cereal agricultural commodities market
Unlike cereals, other agricultural raw materials are suffering from production shortfalls – structurally in the case of cocoa and more sporadically for sugar. Any decline in output puts pressure on the entire value chain, amid durably strong demand. The concentration of supply chains further increases the vulnerability of these markets. For instance, Côte d’Ivoire and Ghana together account for 60% of global cocoa production. However, Ghana’s output has dropped by nearly 50% since 2021, while production in Côte d’Ivoire has stagnated. In a mere two years, the slowdown has tripled international cocoa prices, which are now stabilizing at levels four times higher than the 2015-2019 average.A similar trend has been observed in the coffee market, where prices have doubled over the past two years. Adverse weather conditions in West Africa (cocoa) and Southeast Asia (coffee), combined with structural yield declines and low producer incomes, have weighed heavily on production amid steadily rising demand.
In 2025, escalating trade tensions will undermine the global agri-food sector
Agri-food products are the linchpin of the trade war. The European Union currently appears to be the most exposed region, given the significant share of agri-food in its exports. France, Spain, and Italy are particularly vulnerable to a contraction in agri-food exports to the US and is directly affected by higher tariffs imposed by the Trump administration. The wine and spirits, dairy and confectionery sectors are among the most at risk. On the Asian front, European spirits –notably French cognacs and armagnacs – have been subject to Chinese tariffs since October 2024, in retaliation for EU tariffs on Chinese electric vehicles. China is the second-largest export market for French cognac, accounting for nearly 20% of exports, behind the US (40%). These two countries are critical for the sector, as 95% of French cognac production is exported. Over the last two months of 2024, cognac exports to China collapsed by 76% compared to November–December 2023, and by 59% compared to the same period in 2019.
The trade war could also hurt US cereal producers. Chinese retaliatory measures primarily target US agricultural products, with tariffs of 10% to 15%, including 10% on soybeans. China is the world’s largest soybean importer and the top export destination for US soybeans. During Trump’s first term in 2018, China had already targeted US soybeans, causing exports to plummet by 75%, from USD 12 billion in 2017 to USD 3 billion in 2018. A renewed contraction in Chinese imports would likely drive down US soybean prices. Without guaranteed access to alternative markets (e.g., the EU), US producers would suffer seriously from Trump’s tariff measures.
Moreover, parts of the US agricultural and agri-food industry are highly dependent on foreign labour. For example, 21% of the workforce in meat processing and 42% in crop production are undocumented migrants. These sectors could be severely impacted by a tightening of US immigration policy. In the short term, this would likely result in labour shortages and slower activity, leading to potential revenue losses for businesses. In the longer term, production costs are expected to rise, driven by higher wages for legal foreign workers and US citizens. In a context of slowing US economic growth –Coface forecasts 1.0% GDP growth in 2025 – companies in the sector will face the dual challenge of shrinking margins and softer demand.
Outlook for major agricultural commodities in 2025
Wheat – The latest FAO forecasts for wheat production in 2025 stand at 800 million tonnes, matching the previous year’s output (+0.3% y/y). Global demand is expected to remain stable in 2025. As a result, we anticipate wheat prices to remain relatively low, around 250 USD/t (-7% y/y).
Maize – Global maize production is expected to reach a record high in 2025, according to the FAO, with an estimated increase of 3.5% compared to 2024, reaching approximately 1.2 billion tonnes. This growth is mainly being driven by improved yields in Brazil and India, where domestic demand for animal feed and industrial use has boosted planting. Conversely, declines are expected in the EU due to unfavourable weather and revised planting areas. Global maize consumption is also expected to rise slightly (+0.3% y/y), reaching 1.5 billion tonnes, supported by increased use in feed and industry. In the first half of 2025, global maize prices fell significantly due to abundant supply from South America. In the medium term, prices are expected to remain on a downward trend. For the year, we forecast an average price of 210 USD/t, which is a drop of about 20% compared to 2024.
Soybeans – Global soybean production is expected to grow slightly in 2025, according to the FAO (+1.4%, 427 Mt), following a 6% increase last season. Growth is mainly concentrated in Brazil, while production remains stable in Argentina and the US. Only Europe, notably France, is expected to see a decline in its modest output. On the demand side, China has been the main driver of global demand, which is now stabilising. While Beijing had already shifted its imports away from the US (-31% since 2017) toward Brazil (+48% over the same period), recent retaliation on tariffs by Chinese Customs is likely to reinforce this trend. We therefore expect relatively stable prices in 2025 (2% y/y), around 425 USD/t.
Rice – Global rice production is expected to increase again in 2025 according to the FAO, mainly due to an expansion of cultivated areas of almost 1%. Production has reached a record level of 552 million tonnes by milled equivalent. Rice consumption growth will remain strong (+2% y/y), driven notably by several African countries. Consumption is expected to reach an all-time high. The reopening of Indian rice exports in October last year also contributed to falling prices on international markets. We forecast a price of 430 USD/t in 2025, a drop of nearly 25% compared to the 2024 average.
Agri-food
