Small decrease in food prices in April ‘a welcome relief’

The FAO Food Price Index averaged 158.2 points in April, down 0.8 per cent from the surge in March, but remained nearly 30 per cent higher than in April 2021.

The Index tracks monthly changes in the international prices of a basket of food commodities, and the decrease was led by a slight decline in the prices of vegetable oils and cereals.

Most vulnerable still at risk

“The small decrease in the index is a welcome relief, particularly for low-income food-deficit countries, but still food prices remain close to their recent highs, reflecting persistent market tightness and posing a challenge to global food security for the most vulnerable,” said Máximo Torero Cullen, FAO Chief Economist.

The Vegetable Oil Price Index registered a 5.7 per cent drop in April, shedding almost a third of the increase in March. 

Demand rationing pushed down the prices for palm, sunflower, and soy oils, FAO said, while uncertainties surrounding export availabilities from Indonesia – the world’s leading exporter of palm oil – contained further declines in prices on the international market.

Ukraine war impact

The FAO Cereal Price Index declined by 0.7 points in April, due to a 3.0 percent decline in world maize prices. 

Wheat prices rose 0.2 per cent, strongly affected by continued blockage of ports in Ukraine. The country, together with Russia, accounts for some 30 per cent of global wheat exports.

Other factors behind the increase included concerns over crop conditions in the United States, though tempered by larger shipments from India and higher-than-expected exports from Russia. 

Meanwhile, international rice prices increased by 2.3 percent, bolstered by strong demand from China and the Near East. 

FAO also released updated forecasts for world cereal supply and demand which indicate that although stocks are rising, trade is a likely to decline this year.

Global wheat production is predicted to grow to 782 million tonnes, which incorporates an expected 20 percent decline in harvested area in Ukraine as well as declines due to drought in Morocco.

Record high for meat

FAO said the Sugar Price Index rose 3.3 percent in April, mainly due to higher ethanol prices and concerns over the slow start of the 2022 harvest in Brazil, the world’s largest sugar exporter. 

The FAO Meat Price Index reached a new record high last month, increasing by 2.2 percent as prices rose for poultry, pig and bovine meat. Poultry costs were affected by disruptions to exports from Ukraine and rising avian influenza outbreaks in the northern hemisphere. 

The Dairy Price Index also jumped by 0.9 percent, driven by what FAO described as “persistent global supply tightness”, with milk output in Western Europe and Oceania continuing to track below seasonal levels. 

The agency reported that world butter prices rose the most, influenced by rising demand associated with the current shortage of sunflower oil and margarine.