Measure of world food prices rose for first time in year


Published: 2023-05-05 15:20

Last Updated: 2023-09-29 06:36

Source: FAO (Sugar warehouse in Brazil)
Source: FAO (Sugar warehouse in Brazil)

The Food and Agriculture Organization (FAO) of the United Nations (UN) said that the Food Price Index increased in April for the first time in a year.

This comes amid higher sugar, meat and rice prices across the globe, and lower wheat, maize, dairy products and vegetable oil prices.

The benchmark index of international food commodity prices, which keeps track of changes in the global prices of commonly-traded food commodities on a monthly basis, averaged 127.2 points last month, which is a 0.6 percent increase from the previous month.

This represents a 19.7 percent decrease in comparison to April 2022 but a 5.2 percent increase from April 2021.

-Closer look at rising prices-

The FAO Sugar Price Index increased 17.6 percent in one month, reaching the highest figure since October of 2011.

This comes following a reduction in production and outcomes in India, China, Thailand and the EU because of unprecedented dry weather conditions which delayed the sugarcane crop harvest in Brazil.

In addition to rising international crude oil prices, which could potentially increase the demand for sugarcane-based ethanol.

The FAO Meat Price Index increased 1.3 percent in one month, due to higher pig, bovine and poultry meat prices worldwide.

This rise came amid Asian import demand and production decline due to health issues among animals. As for bovine meat, cattle supplies for slaughter had dropped, most notably in the US.

-Closer look at declining prices-

The FAO Cereal Price Index dropped 1.7 percent in a month, which is 19.8 percent below its value in the same month a year ago.

International wheat prices dropped by 2.3 percent because of large exportable availabilities in Australia and the Russian Federation.

World maize prices dropped 3.2 percent following a seasonal increase in supplies in South America, against a backdrop of reduced harvests due to higher input costs and unstable weather in many countries.

The FAO Vegetable Oil Price Index dropped by 1.3 percent in April, which makes it the fifth consecutive month in which the price declines.

The FAO Dairy Price Index dropped by 1.7 percent due to the ongoing slack in global import demand for milk powders and higher cheese exports in Western Europe.

-Importance of price tracking-

FAO Chief Economist Maximo Torero said: "It is important that we continue to track very closely the evolution of prices and the reasons for increases in prices. As economies recover from significant slowdowns, demand will increase, exerting upward pressure on food prices."

He shared some concerns saying, “At the same time, the increase in rice prices is extremely worrisome and it is essential that the Black Sea initiative is renewed to avoid any other spikes in wheat and maize."

-Forecast and expectations-

FAO adjusted the world wheat production forecast for this year, as the global outturn has been pegged at 785 million tons.

Brazil’s production of maize is expected to climb to an all-time high, while Argentina's production is expected to drop below average levels as a result of ongoing dry conditions and heat waves. South Africa's production is expected to also reach the second-highest harvest of all time.

As for rice production, the impact of the La Niña has caused varying expectations regarding the areas along and south of the equator. 

FAO raised its projection for cereals' world trade to 472 million tons, approximately 2.2 percent below its all-time high-value last season.

Global wheat trade in 2022/23 is forecast at 2.3 percent, global coarse grains trade by 5.5 percent and rice by 4.4 percent year-to-year.

World cereal utilization in 2022/23 is forecast at 2 780 million tons and world cereal stocks at 855 million tons by the close of seasons.

According to the latest forecasts, the 2022/23 global cereal stocks-to-use ratio is expected to stand at 29.8 percent, which is a slight decrease from 30.8 percent over the past year, but a "relatively comfortable supply level globally," said the FAO.