World food commodity prices eased in April, according to the Food and Agriculture Organisation of the United Nations (FAO).
It follows a surge in prices during the previous month to record-high levels driven by the war in Ukraine which “spread shocks through markets for staple grains and vegetable oils”.
The decline in April was due to a slight reduction in prices for cereals and vegetable oils. However, meat, dairy, rice and sugar prices increased.
The FAO Food Price Index averaged 158.5 points last month, down 0.8% from the all-time high reached in March.
The index, which tracks monthly changes in the international prices of a basket of commonly-traded food commodities, remained almost 30% above the April 2021 level.
“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,” Máximo Torero Cullen, FAO chief economist, said.
Food price index
The FAO Vegetable Oil Price Index decreased by 5.7% in April, shedding almost a third of the increase registered in March.
This was due to demand rationing pushing down prices for palm, sunflower and soy oils.
Uncertainties about export availabilities out of Indonesia, the world’s leading palm oil exporter, contained further declines in international prices.
The FAO Cereal Price Index declined by 0.7 points in April, nudged downwards by a 3% decline in world maize prices.
Despite the continued blockage of ports in Ukraine and concerns over crop conditions in the US, international wheat prices increased by 0.2%.
This was due to larger shipments from India and higher-than-expected exports from Russia.
International rice prices increased by 2.3% from their March levels, buoyed by strong demand from China and the Near East.
Meanwhile, the FAO Sugar Price Index increased by 3.3%, driven by 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 increased by 2.2%, setting a new record high, as prices rose for poultry, pig and bovine meat. However, sheepmeat prices averaged marginally lower.
The FAO Dairy Price Index was up, by 0.9% because of tight global supplies. Milk output in western Europe and Oceania has continued below their seasonal levels.
Due to the current shortage of sunflower oil and margarine, the largest price increase in the dairy index was for butter.
Cereal demand
Meanwhile, the FAO Cereal Supply and Demand Brief pointed to a likely 1.2% decline in world trade in cereals in the 2021/22 marketing year.
The decline is linked with maize and other coarse grains, while trade volumes for rice are predicted to grow by 3.8% and wheat by 1%.
FAO still predicts global wheat production to grow in 2022, to 782 million tonnes.
With almost all crops harvested for the 2020/21 cycle, FAO set the world cereal production at 2,799 million tonnes, an 0.8% increase from the 2019/20 outturn.
World cereal utilisation for the 2021/22 period is projected to increase by 0.9% from the previous year to 2,785 million tonnes.
FAO’s new estimate for world cereal stocks by the close of seasons in 2022 now stands at 856 million tonnes, 2.8% above opening levels, led by a build-up in maize inventories partly due to suspended exports from Ukraine.
If confirmed, the global cereal stocks-to-use ratio would end the period unchanged at a “relatively comfortable supply level” of 29.9%, according to FAO.
That forecast incorporates an expected 20% decline in harvested area in Ukraine as well as drought-driven output declines in Morocco.