Global Food Prices Continue to Drop for 12th Consecutive Month in March, says FAO

The Food and Agriculture Organization's (FAO) price index, which tracks the most widely traded food items worldwide, averaged 126.9 points in March, down from 129.7 in February, the agency reported on Friday. It was the lowest level since July 20, 2021.

The original reading for February was 129.8. According to FAO, the decline was caused by a combination of adequate supply, low import demand, and the renewal of a pact allowing the safe transport of Ukrainian grain over the Black Sea.

The reduction in the index was attributed to lower prices for cereals, vegetable oils, and dairy goods, which countered increases in sugar and meat prices, according to the Rome-based organization. "While global prices have fallen, they remain very high and continue to rise in domestic markets, posing additional challenges to food security," said Maximo Torero, FAO's chief economist, in a statement.

"This is especially true in net food importing developing countries, where the situation is exacerbated by currency depreciation against the US dollar or the euro, as well as a mounting debt burden," he added. In March, the FAO cereal price index declined 5.6% month on month, with wheat falling 7.1%, maize falling 4.6%, and rice falling 3.2 percent.

The index for vegetable oils declined 3.0%, or 47.7%, from its peak in March 2022, while the dairy index fell 0.8%. Sugar, on the other hand, increased 1.5% to its highest level since October 2016, owing to fears over falling supply prospects in India, Thailand, and China. The meat price index increased 0.8%.

In a separate analysis on cereal supply and demand, the FAO upped its projection for world wheat production in 2023 to 786 million tonnes, 1.3% lower than in 2022 but still the second highest output on record.

"Near-record sown areas are expected in Asia, while dry conditions affect North Africa and southern Europe," according to the FAO. FAO also increased its prediction for global cereal production in 2022 to 2.777 billion tonnes, a 1.2% decrease from the previous year. World rice production in 2022/23 was 516 million tonnes, 1.6% lower than the record crop in 2021/22.

According to FAO, global cereal usage in 2022/23 would be 2.779 billion tonnes, a 0.7% decrease from 2021/22. World cereal stocks are predicted to fall 0.3% from their initial levels to 850 million tonnes by the end of the 2022/2023 season.