Agri commodity markets outlook 2027: Farming through the fog

Farming through the fog

Agricultural commodity markets enter 2027 in a thick fog of geopolitical conflict, policy uncertainty, volatile energy costs, and extreme weather. Disruptions to major shipping routes and Black Sea grain trade are raising costs and complicating trade, while governments are intervening more actively in agriculture, energy, and food security. These forces increasingly shape markets alongside traditional supply-and-demand fundamentals.

Geopolitics and energy remain key risks

Conflict has made maritime trade more vulnerable and pushed up energy, fertilizer, freight, and insurance costs. Energy markets are likely to remain volatile in 2027. RaboResearch expects crude oil and diesel prices to stay elevated through at least the first half of the year, with diesel remaining particularly tight because of low inventories and refining constraints.

At the same time, the global economy has proved resilient to repeated shocks, but that resilience comes at a cost. Higher spending on defense, infrastructure, and energy security, alongside geopolitical fragmentation, is contributing to elevated financing and working-capital costs for food and agriculture.

Weather adds another layer of uncertainty

The strong El Niño event is expected to fade by the second quarter of 2027, but its effects vary considerably by commodity. Conditions have been relatively benign for most grains and oilseeds, while palm oil, cocoa, sugar, and coffee have faced more adverse weather. Fertilizer affordability, meanwhile, is expected to improve overall in 2027 as prices gradually soften, although the outlook differs by nutrient and region.

Commodity outlooks diverge

There is no single direction for agricultural commodity prices in 2027. Wheat stocks are expected to tighten further, with geopolitical disruption and two consecutive global deficits supporting prices. Corn should remain comparatively well supplied but faces declining global stocks, while US soybean fundamentals are more constructive than a year ago. Biofuel demand supports the outlook for soy oil.

Palm oil supplies are expected to tighten as production declines and Indonesia’s B50 biodiesel mandate increases domestic use, supporting higher average prices. Sugar also faces a projected global deficit in 2026/27. By contrast, the sizable 2026/27 coffee surplus is expected to put downward pressure on prices. Cocoa supply risks support prices in the near term, but that pressure is expected to fade as 2027 progresses and the supply outlook improves.