Global (Commonwealth) _As supply fears subsided, global food prices decreased in 2023, with notable drops for grains and oils, according to a new report from the UN Food and Agriculture Organization (FAO). The Rome-based FAO reported that in 2023, as compared to the previous year, world food commodity prices dropped by 13.7%.
In contrast to 2022, when prices skyrocketed following Russia’s invasion of Ukraine, a significant grain exporter, the FAO’s cereal price index decreased 15.4% the previous year, “demonstrating well supplied global markets”.
For wheat and maize, supply worries subsided, but because of the effects of the El Nino weather phenomena and India’s export restrictions, rice supply issues persisted. Last year, rice prices rose by 21%. Last year, the vegetable oil price index saw the largest decline, falling 32.7%, as a result of increased supply and decreased use in the manufacturing of biofuel.
In contrast, sugar prices increased by 26.7% overall in the previous year, however they dropped from their peak in December as a result of Brazil’s increased exports and decreased usage of biofuels.
Consumer food costs are growing significantly and often at a greater pace than the global inflation rate in several countries, even if the FAO’s overall index decreased. Commodity market prices are measured by the FAO’s index, which is somewhat delayed in relation to consumer prices. Consumer prices are influenced by labor and energy expenses throughout the processing and distribution phases.
Global food commodity prices close 2023 almost 10% lower than they were a year ago, with international sugar quotes showing the biggest decline. During this time frame, the only category with a higher average was the worldwide sugar price index.
Prices for wheat, maize, rice, and barley have increased, contributing to a 1.5% increase in the FAO Cereal Price Index from November. Logistical issues that affected shipments from large exporters are partly to blame for this upsurge. Even with this monthly rise, the index’s yearly average for 2023 was 15.4% lower than for 2022, indicating a globally supplied market that was in sufficient supply.
However, because of “concerns about the impact of El Niño on rice production and in the aftermath of export restrictions imposed by India,” the FAO’s All Rice Price Index, which is a component of the Cereal Price Index, saw a 21% spike.
Due to increased demand over the holidays and a decrease in the supply of slaughter, the price of ovine meat increased after falling for two months in a row. From November to December, the FAO Vegetable Oil Price Index fell by 1.4%. Lower demand for sunflower seed oil, palm, soy, and rapeseed oil was the main cause of this drop. The index for 2023 fell 32.7% on an annual basis from the year before.
According to FAO, the decline in soy oil purchases was mainly caused by a reduction in the demand from the biodiesel industry and better weather in Brazil’s main growing regions. The FAO Sugar Price Index showed a shift, falling 16.6% from November to a nine-month low. The index was nonetheless 14.9% higher in December 2022 than it was in December 2022.
According to FAO, India’s decreased usage of sugarcane for the creation of ethanol and Brazil’s rapid rate of production were the primary causes of the decline in sugar quotations. Vegetable oils saw the biggest price declines, with the price index down 1.4% in December from November and a significant 32.7% decrease for the whole year.
The FAO Meat Price Index was 1.8% less than December 2022 and had slightly decreased from November by 1.0%. According to FAO, despite plentiful supply, the issue was mostly caused by poor import demand from Asia for pig meat and sluggish regional buying interest for bovine and poultry meat. On the other hand, the cost of ovine meat went up ahead of the Christmas season.
The FAO Dairy Price Index increased 1.6% from November to December 2022, defying the general declining trend, however it was still 16.1% below its December 2022 figure. Higher price quotes for cheese and butter drove this rise, which was supported by strong worldwide demand for whole milk powders and good internal sales in Western Europe over the Christmas season.
