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Despite the El Niño-related weather disturbances affecting key agricultural areas globally and the disruptions in the Black Sea stemming from the war in Ukraine, there is encouraging data suggesting further easing in food inflation in the new year.

This development comes amid the soaring risks of food riots in emerging markets, as the weakening of EM currencies against the dollar has made staple foods increasingly more expensive for poorer populations worldwide. 

Bloomberg data shows corn and wheat prices have recorded their largest annual declines in a decade. This is primarily because of bumper crops in key agriculture regions, and it might lead to further easing of food inflation into the first half of 2024. 

Corn futures on the Chicago Board of Trade plunged 31% this year, and wheat contracts fell 21% -- the largest annual declines since 2013. Soybeans were down 15%. This led the Bloomberg Grains Spot Subindex to slide 22.8%. This is good news for the United Nations Food and Agriculture Organization World Food Price Index, which has already come off record highs. 

"The rout was driven by bumper crops in key crop suppliers Brazil, US and Russia following years of disruptions caused by extreme weather, the Covid-19 pandemic and Russia's war in Ukraine that pushed prices to record highs in 2022," Bloomberg wrote in a note, adding, "Lower prices for staple grains could bring down the cost of bread and make it less expensive to feed livestock, dairy herds and even biofuels. Analysts are anticipating even lower prices for corn and soybeans in 2024, while wheat is expected to rebound amid tighter supplies." 

However, there is still uncertainty about whether global food prices will decrease swiftly enough to prevent food riots in EM countries. The current food price levels are comparable to those that sparked the Arab Spring riots in the Middle East in 2010.

Sara Menker, founder and CEO of Gro Intelligence, warned last month in an interview with Bloomberg TV on the sidelines of Bloomberg's New Economy Forum in Singapore that the current food crisis surpassed the one in 2007-08. She explained this is mostly because of elevated crop prices and steep declines in local currencies against the dollar. 

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