“FAO”: Food prices in March were 20.5% lower than the peak

The Food and Agriculture Organization of the United Nations (FAO) said, on Friday, in a statement, that “the international food commodity price index fell for the 12th consecutive month in March, driven by a decline in international prices of cereals and vegetable oils.”

And the “FAO” stated that “the available abundance, weak demand for imports, and the extension of the initiative on Black Sea grains, the agreement that allowed the export of Ukrainian grains, contributed to this decline,” noting that “prices are still burdening importing countries with difficult economic conditions.”

The FAO Food Price Index, which tracks monthly changes in the international prices of commonly traded food commodities, reached 126.9 points in March 2023, down 2.1% from the previous month and 20.5% from the peak level in March 2022.
Grain prices fell

The FAO Cereal Price Index decreased by 5.6% compared to February, with global wheat prices declining by 7.1%, driven by strong production in Australia, improved crop conditions in the European Union, higher supplies from the Russian Federation, and continued exports from Ukraine. Global maize prices fell 4.6%, partly due to expectations of a record crop in Brazil, while rice prices fell 3.2%, amid ongoing or impending harvests in major exporting countries, including India, Vietnam and Thailand.

Low oil prices

The FAO Vegetable Oil Price Index declined on average 3.0% from the previous month and 47.7% below its level in March 2022, as ample global supplies and lower global import demand led to lower prices for soybeans, rapeseed and sunflower oil. This was offset by higher palm oil prices, which were pushed up by lower production levels in Southeast Asia, caused by floods and temporary export restrictions imposed by Indonesia.

“While prices have declined globally, they are still very high and continue to increase in domestic markets, which poses additional challenges to food security,” said Maximo Torrero, Chief Economist at FAO. This is particularly the case in net food importing developing countries, with the situation exacerbated by the depreciation of their currencies against the US dollar, or the euro, and the growing debt burden.”
Lower prices of dairy products

The FAO Dairy Price Index fell 0.8% in March. Butter prices increased due to strong import demand, while cheese prices declined due to slowdown in purchases by most major importers in Asia, as well as increased availability in major exporters.
By contrast, the FAO Sugar Price Index rose 1.5% from February, to its highest level since October 2016, reflecting concerns about lower production prospects in India, Thailand and China. A positive outlook for the sugarcane crop about to be harvested in Brazil limited the upward pressure on prices, as did lower international crude oil prices, which lowered demand for ethanol.

High meat prices

The FAO Meat Price Index rose slightly by 0.5%. Global beef prices rose, affected by higher domestic prices in the United States of America, on expectations of lower supplies, while pork prices rose due to increased demand in Europe ahead of the holidays. Despite outbreaks of avian influenza in several large exporting countries, global poultry meat prices fell for the ninth month in a row, due to lower global import demand.

Wheat production increased

In a separate report on cereal supply and demand, the FAO raised its forecast for world wheat production in 2023 to now stand at 786 million tonnes, 1.3% lower than 2022 levels but still the second largest ever.
And the organization expected that “the cultivated areas are approaching record levels in Asia, while drought conditions affect northern Africa and southern Europe.”
The FAO also raised its estimate for global cereal production for 2022 to 2.777 billion tonnes, down just 1.2% from the previous year.
It is expected that global rice production in the 2022-2023 season will reach 516 million tons, 1.6% less than the record crop for the 2021-2022 season.
The FAO estimated global cereal consumption in 2022-2023 at 2.779 billion tonnes, down 0.7% from 2021-2022. Global cereal stocks are expected to decline by the end of the 2022-2023 season by 0.3% from their levels at the beginning, to 850 million tons.