Source: Dubai – Arabic.net
Global food prices fell sharply in March. This drop was mostly driven by shrinking demand due to the effects of the Covid 19 pandemic and the drop in global oil prices, mostly due to expectations of an economic slowdown as governments imposed restrictions in response to the health crisis, according to the Food and Agriculture Organization of the United Nations (FAO).
The average Food and Agriculture Organization of the United Nations (FAO) food price index, which indicates the monthly change in the prices of a basket of food commodities usually traded on international markets, reached 172.2 points during the month, a decrease of 4.3% from February, the lowest level To him since 2015.
“The price drop is largely driven by factors of demand, not supply, which are affected by economic expectations that are deteriorating over time,” Abdel-Reda Abbasian, chief economist, said in a statement issued by the FAO.
The FAO Sugar Price Index recorded the largest decline, dropping 19.1% from last month. The reasons for this include a decrease in demand due to consumption in the home associated with the stone measures imposed by many countries, and a decrease in demand from ethanol producers due to the sharp drop in crude oil prices.
The FAO Vegetable Oil Price Index decreased by 12.0% in one month, mainly due to the decrease in palm oil prices associated with the drop in the prices of mineral oils and the rise of doubts about the impact of the pandemic on vegetable oil markets around the world. Soybean and rapeseed oil prices followed the same trend.
“The price of oil has fallen by more than half over the past month, which is reflected in a significant drop in the price of biofuels, which is an important source of demand in the sugar and vegetable oil markets,” said FAO analyst Peter Thuyens.
The FAO dairy price index fell 3.0%, driven by lower prices and global demand for imports of skimmed milk powder and whole milk, due in large part to turmoil in milk supply chains due to containment measures aimed at controlling the spread of Covid-19.
The FAO cereal price index decreased in March by 1.9% compared to February and stood at almost the same level in March 2019. International wheat prices have declined, as the effects of large global supplies and expectations of favorable crops generally exceeded the effects of increased demand for imports from North Africa and some small export restrictions imposed by the Russian Federation. Corn prices also fell due to large supplies and weak demand from the biofuel sector. By contrast, world rice prices rose for the third month in a row, as indica rice prices rose due to stockpiling sparked by pandemic concerns and reports that Vietnam might impose an export ban – which the government has since underestimated.
FAO closely monitors prices and logistical issues related to food commodities, keeping in mind that countries are alerted to emerging problems that could exacerbate potential disruptions to food supplies during the pandemic.
The FAO Meat Price Index decreased by 0.6%, driven by lower international prices for sheep and beef, which are available for bulk export and have less capacity to trade because of logistical challenges. But pork prices have risen amid increasing global demand, as processing facilities are hampered by restrictions on the movement of workers.
FAO’s forecast for global wheat production for 2020 was unchanged from last month, and it remained at a record close to last year’s level, which, along with ample stocks, will help protect food markets from turmoil during the Corona storm.
In the FAO brief on cereal supply and demand for this month, released today as well, FAO increased its estimates for world cereal production in 2019 to 2721 million tons, an increase of 2.4% over 2018. By type, the FAO estimates for 2019 are now 445 million Tons of coarse grains, 763 million tons of wheat, and 512 million tons of rice (based on ground rice).
While the local unrest, most of which is due to logistical issues, poses challenges to food supply chains in some markets, FAO said, their duration and expected size are unlikely to have a major impact on global food markets.
The FAO forecast for world wheat production for 2020 did not change from last month and remained at 763 million tons, with expectations of lower production in the European Union, Ukraine and the United States of America, which will be offset by the abundance of expected production in the Russian Federation, India and Pakistan, despite locust outbreaks in the two countries The last two, which can mitigate the expected increase.
As for maize, the main coarse grains, it is expected that Brazil and Argentina will witness an abundant harvest, and maize production in South Africa is expected to recover strongly after the drought that hit it last year. In other countries, planting decisions may be affected by the global corn price contraction.
The FAO forecast for global cereal uses during 2019/2020 increased slightly to 2722 million tons, with an annual increase of 1.2%. Global cereal stocks are expected to shrink at the end of the 2020 seasons by 8 million tons from their levels at the beginning of the season, which raises the ratio of global stocks to use of cereals to 30.7%, but it remains a comfortable ratio. It is expected that the value of world trade in cereals will increase by 2.3% from the previous year to reach 420 million tons.