Morgan Stanley recently held a virtual Food Inflation & Security Symposium, in which the bank discussed a wide range of topics with experts from around the world. The Symposium followed the publication of the bank’s global collaborative note that involved over 30 Morgan Stanley analysts, entitled “Food Security & Inflation: From Seeds to Stores” (the note is available to professional subs).
Below we summarize the bank’s key takeaways and variables that will drive future food prices, along with associated impacts to businesses and geopolitics.
1. The majority view among experts and executives broadly matched Morgan Stanley’s view that food prices will likely reach a peak in 2022, a view that is below consensus among investors and below forward commodity prices. That said, there was significant discussion during multiple Symposium sessions around the magnitude of variables that could impact pricing, variables that are challenging to predict. For example, a chemical company executive viewed potash prices as likely to have already hit a peak, but the executive also believed that potash prices would remain high, representing a disconnect from prior periods of much lower fertilizer prices. Other experts pointed out the magnitude of impacts to food prices from crucially important (and challenging to predict) variables such as weather (especially in South America over the next several months), energy prices and geopolitics (and many speakers highlighted how closely these last two variables are linked).