Food Prices in March at Lowest Level in a Year and a Half

Global food prices fell in March to their lowest level in a year and a half, reported the United Nations agency FAO on Friday, highlighting the decrease in grain and vegetable oil prices due to ample supply and subdued demand.

The index of prices for a basket of staple food products fell by 2.8 points in March compared to the revised value for February, averaging 126.9 points, the lowest value since July 2021.

The decline in the index reflects ample supply, subdued import demand, and the extension of an agreement allowing grain exports across the Black Sea, FAO explains.

Grain prices fell by 5.6 percent compared to February, the UN agency determined, highlighting a 7.1 percent drop in wheat prices due to good harvests in Australia, improved conditions in the EU, ample supplies from Russia, and ongoing exports from Ukraine via Black Sea ports.

Corn also decreased in price by 4.6 percent due to forecasts of a record harvest in Brazil. Rice prices fell by 3.2 percent, which FAO explains by the upcoming harvest in key exporters, including India, Vietnam, and Thailand.

Vegetable oils decreased by 3.0 percent compared to February, and compared to last year’s March, their prices are down by 47.7 percent due to ample supply and subdued demand.

– Although global prices have fallen, they are still very high and continue to rise in domestic markets, which poses additional challenges for food security – warned FAO’s chief economist Maximo Torero in a statement.

– This is especially true for developing countries that are net food importers, and the situation is worsened by the depreciation of their currencies against the US dollar or euro and the increasing debt burden – added Torero.

Milk and dairy product prices were 0.8 percent higher in March than in February, supported by solid demand for butter.

Sugar, on the other hand, increased by 1.5 percent, meaning its prices reached the highest level since October 2016, driven by concerns over reduced production in India, Thailand, and China.

Meat prices also slightly increased by 0.8 percent, reflecting higher internal beef prices in the US due to expected weaker supply and rising pork prices in Europe ahead of the holidays.

Reduced Grain Trade

In a separate report on supply and demand in grain markets, FAO slightly raised its estimate of global wheat production for 2023 to 786 million tons, which would be 1.3 percent less than last year, but still close to record levels.

– In Asia, nearly record sown areas are expected, while drought affects North Africa and Southern Europe – FAO reported.

FAO also slightly increased its estimate of global grain production in 2022 to 2.777 billion tons, which is only 1.2 percent less than the previous year.

Global rice production in the 2022/2023 season is expected to reach 516 million tons, down 1.6 percent from the record 2021/2022.

Grain consumption in 2022/2023 is estimated at 2.779 billion tons, FAO said, a decrease of 0.7 percent compared to 2021/2022.

Ending stocks at the end of the current season are expected to be 0.3 percent lower than at the beginning, sliding to 850 million tons.

Grain trade is expected to decrease by 2.7 percent this season, to 469.2 million tons.