Global Food Prices Increase in March, FAO Reports First Upward Trend in 7 Months

Global food prices have increased for the first time in seven months.

And while the Food and Agriculture Organisation (FAO) of the United Nations (UN) says its food price index is 7.7 per cent lower than it was a year ago, overall food commodity prices are still above where they were before the COVID-19 pandemic.

“Rising international quotations for vegetable oils, dairy products and meat pushed the benchmark index for world food commodity prices up by 1.1 per cent in March, its first increase in seven months,” the FAO says.

“The FAO Food Price Index, which tracks monthly changes in the international prices of a set of

globally-traded food commodities, averaged 118.3 points in March, down 7.7 per cent from its corresponding value one year ago.”

The UN organisation explained that its Vegetable Oil Price Index “led the increase in March, rising eight per cent from February and reaching a one-year high as quotations for palm, soy, sunflower and rapeseed oils all rose”.

“International palm oil prices increased due to seasonally lower outputs in leading producing countries and firm domestic demand in Southeast Asia, while those for soy oil recovered from multi-year lows, boosted by robust demand from the biofuel sector, particularly in Brazil and the United States of America,” it elaborated.

The report also said that the Dairy Price Index increased for the sixth consecutive month, up 2.9 per cent from February, led by rising world cheese and butter prices.

The Meat Price Index also increased, rising 1.7 per cent from the previous month, with international prices up for poultry, pig and bovine meats.

On the other hand, the Cereal Price Index declined by 2.6 per cent, averaging 20 per cent below its March 2023 value.

The FAO reported that “the drop was led by decreasing global wheat export prices, which declined due to ongoing strong export competition – underscored by cancelled purchases by China – among the European Union, the Russian Federation and the United States of America”.

“Maize export prices edged upwards in March, partly due to logistical difficulties in Ukraine, while the FAO All Rice Price Index dipped by 1.7 per cent amid subdued global import demand,” it stated.

“The FAO Sugar Price Index declined by 5.4 per cent from February, with the drop mainly driven by an upward revision to the 2023/24 sugar production forecast in India and the improved pace of the harvest in Thailand.”

The FAO also released a new Cereal Supply and Demand Brief in which it raised the forecast for world cereal production in 2023/24 to 2 841 million tonnes, reflecting expectations of greater outputs of maize, rice and wheat.

“Global cereal utilisation in 2023/24 is pegged at 2 828 million tonnes, a 1.3 per cent increase from the 2022/23 level. World cereal stocks are forecast to end the 2024 seasons at 894 million tonnes, a 2.3 per cent increase from the outset of the year, pointing to a worldwide cereal stocks-to-use ratio of 31 per cent,” it said in the brief.

“World trade in cereals is forecast to rise 1.7 per cent from the previous year to 485 million tonnes in 2023/24. International trade in coarse grains is expected to expand from 2022/23, while wheat and rice trade will likely contract.

Meanwhile, in its latest food security update, the World Bank said that since February 29, “the agriculture and cereal price indices closed two per cent higher, respectively, and the export price index closed one per cent higher.

“Among cereals, maize prices closed 12 per cent higher, wheat prices were down four per cent, while rice prices closed at the same level compared to two weeks ago. On a year-on-year basis, maize prices are 32 per cent lower and wheat prices are 21 per cent lower,” it reported.

“Rice prices on the other hand are 27 per cent higher. Compared to January 2020, maize prices are 14 per cent higher, wheat prices are three per cent lower, and rice prices are 50 per cent higher.”

The World Bank added that “despite external disruptions such as shipping problems and farmer protests in various countries, food commodity markets remained relatively stable,” it reported.

“Wheat, maize, and soybean prices decreased to their lowest levels in two years, and rice prices decreased slightly because of a reduction in trading during the Lunar New Year holidays, although they remained significantly higher than a year ago.”