FAO’s Food Price Index Surged by 1.1% in March

Gilbert Ekugbe

The Food and Agricultural Organisation (FAO) has stated that its benchmark index for world food commodity prices surged by 1.1 per cent in March.

According to the United Nations food body, the rise is the first increase in seven months owing to rising international quotations for vegetable oils, dairy products and meat.

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 percent from its corresponding value one year ago.

The FAO Vegetable Oil Price Index led the increase in March, rising 8.0 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.

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

By contrast, the FAO’s Cereal price Index declined by 2.6 per cent, averaging 20 per cent below its March 2023 value. 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 while maize export prices edged upwards in March, partly due to logistical difficulties in Ukraine,

The FAO All Rice Price Index dipped by 1.7 per cent amid subdued global import demand while 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.

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

FAO added that global cereal utilisation in 2023/24 is pegged at 2 828 million tonnes, a 1.3 per cent increase from the 2022/23 level as 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 31.0 percent.

“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,” FAO stated.

It also adjusted its forecast for global wheat production in 2024, now standing at 796 million tonnes, marking a 1.0 percent increase from 2023.

For coarse grain crops, sowing will begin soon in the northern hemisphere, while harvests have already begun south of the equator. While Argentina’s output is expected to rebound after the drought-impacted outturn of 2023, smaller outputs are expected in Brazil and across Southern Africa.