Business a.m
The Food and Agriculture Organisation (FAO) of the United Nations has released its latest food price index, showing a decline in global food prices for the seventh month in a row in February and the lowest level in three years.
The index, which measures the average monthly change in international prices of a basket of food commodities, fell by 0.9 per cent compared to the previous month as declining prices for all major cereals offset the rising price of sugar and meat.
According to the report, the prices of the most globally traded food commodities averaged 117.3 points in February, which was lower than the revised 118.2 points recorded in the previous month. This is the lowest reading since February 2021, reflecting a downward trend in the global food price index.
The FAO reported that the cereal index dropped by five per cent month-on-month in February, compared to the same month in the previous year. The decline was attributed to two main factors: increased expectations of large maize harvests in South America and competitive prices offered by Ukraine.
According to the FAO, prices of vegetable oils fell by 1.3 per cent in February compared to the previous month. The decline was driven by increased prospects for abundant supplies from South America, which led to lower prices for both rapeseed and sunflower oil. In addition, strong exports of these commodities from Ukraine have helped to keep prices down. Overall, the vegetable oil index was 11 per cent below its level a year ago.
While the prices of most food commodities declined in February, the UN agency's sugar index rose by 3.2 per cent month-on-month. This increase was driven by concerns about the upcoming sugar production in Brazil, the world's largest sugar producer. There are also forecasted declines in production in Thailand and India, which are also major producers.
The international agency also released a separate report that estimated the 2023 cereal output to increase by 1.1 per cent from the previous year to 2,840 million metric tonnes. This increase is largely due to higher maize supplies in Brazil, China, and the U.S. Other notable changes include a slight increase in wheat production, despite the ongoing war in Ukraine, and an increase in rice production. The report also noted that global cereal stocks are expected to increase by 2.1 per cent from 2022, reaching an all-time high of 783 million metric tonnes.
According to the UN report, wheat production in 2024 is expected to rise by 1% compared to 2023, reaching a total of 797 million tons. This increase is attributed to favourable weather conditions in key wheat-producing countries such as North America, Russia, China, India, Iran, Pakistan, and Turkey.
