Prices for soft commodities will continue to grow through 2018, despite a sharp slowdown in Chinese economic growth. According to the Economic Intelligence Unit (EIU), Chinese growth will slow to just 4.2% in 2018 from 6% in 2017.
This contrasts with prices for industrial raw materials (IRM), which the EIU forecasts will fall in 2018 after growing strongly in 2017.
“Agricultural commodity prices will remain on a modest upward trend in 2018, despite the economic problems in China, underpinned by rising populations and incomes, as well as rabid urbanisation and changing diets,” the EIU said.
According to the EIU, prices will rise by 1.7% in 2017 after a 3.4% fall in 2016, with continued small annual increased through to 2021.
“We expect our Foods, Feedstuffs and Beverages (FFB) index to rise throughout the forecast period,” the EIU continued. “Annual increases will be marginal, however, as ample stock availability following successive bumper crops will prevent faster increases.”
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