FAO reports steep drop in world food prices in April due to coronavirus

World food prices fell for a third consecutive month in April amid economic and logistical upheaval from COVID-19.
calendar icon 7 May 2020
clock icon 2 minute read

According to reporting in Reuters, the Food and Agriculture Organisation (FAO) food price index, which measures a monthly price fluctuations for a basket of cereals, oilseeds, dairy products, meat and sugar, averaged averaged 165.5 points last month, down 3.4 percent on March.

The vegetable oil price index fell 5.2 percent, hit by falling palm, soy and rapeseed oil values, while the dairy index dropped 3.6 percent, with butter and milk powder prices posting double-digit declines.

The meat index shed 2.7 percent, with a partial recovery in import demand from China failing to balance a slump in imports elsewhere. FAO also said major producing countries suffered logistical bottlenecks, while coronavirus lockdowns in many nations had caused a sharp fall in sales.

"The pandemic is hitting both the demand and supply sides for meat, as restaurant closures and reduced household incomes lead to lower consumption and labour shortages on the processing side are impacting just-in-time production systems," said FAO Senior Economist Upali Galketi Aratchilage.

By contrast with the other indices, FAO's cereal price index declined only slightly, as international prices of wheat and rice rose significantly while those of maize dropped sharply.

Prices of coarse grains, including maize, fell 10 percent, hit by reduced demand for both animal feed and biofuel production.

FAO held its forecast for cereal production largely steady at 2.720 billion tonnes in 2019, but reduced its forecast for cereal utilisation in 2019/20 by 24.7 million tonnes, mainly because of the impact of the coronavirus on the economy.

FAO also unveiled its first forecasts for global wheat supply and demand in the 2020/21 marketing season, predicting world production at 762.6 million tonnes, broadly in line with the 2019 level.

It said it expected smaller harvests in the European Union, north Africa, Ukraine and the United States. This would be largely offset by larger harvests in Australia, Kazakhstan, Russian and India.

Global wheat utilisation in 2020/21 was expected to be stable, with anticipated increases in food consumption outweighing reductions in feed and industrial uses.

Read more about this story here.

© 2000 - 2022 - Global Ag Media. All Rights Reserved | No part of this site may be reproduced without permission.