UNITED NATIONS, World food prices leaped nearly 13% in March and hit a new record, with the war in Ukraine causing turmoil in grain markets essential oils and edible oils, according to the Food and Agriculture Organization (FAO), a UN agency. The Rome-based agency’s Food Price Index, which tracks the most traded food commodities globally, averaged 159.3 points last month, up from 141.4 points in February.
The February number was initially reported at 140.7, which was already a record. Russia and Ukraine are major exporters of wheat, corn, barley and sunflower oil across the Black Sea, and Moscow’s six-week military offensive against the neighboring country has halted Ukrainian exports. Driven by soaring wheat and coarse grain prices – largely as a result of the war in Ukraine – the FAO Cereal Price Index was 17.1 per cent higher in March than it was just a month earlier.
Over the past three years, Russia and Ukraine combined, accounted for around 30 per cent and 20 per cent of global wheat and maize exports, respectively. FAO’s newly released Cereal Supply and Demand Brief estimates that at least 20 per cent of Ukraine’s winter crops that were planted, may not be harvested. But, it also points to a worldwide cereal production of 2,799 million tonnes, up slightly from 2020, with rice production reaching an all-time high of 520.3 million tonnes.
And global cereal use in 2021-22 is projected to reach 2,789 million tonnes, including a record level for rice, with increases also expected for maize and wheat. Global cereal stocks are forecast to rise by 2.4 per cent by the end of this year, from their opening levels, largely due to higher wheat and maize stocks in Russia and Ukraine, on account of lower expected exports. FAO lowered its forecast for world trade in cereals in the current marketing year to 469 million tonnes, marking a contraction from the 2020-21 level, largely due to the war in Ukraine and based on currently available information.
Expectations point to the European Union and India increasing wheat exports, while Argentina, India and the United States ship are likely to ship more maize – partially compensating for the loss of exports from the Black Sea region. The FAO Vegetable Oil Price Index rose 23.2 per cent, driven by higher quotations for sunflower seed oil, of which Ukraine is the world’s leading exporter.
Palm, soy and rapeseed oil prices also rose markedly as a result of the higher sunflower seed oil prices and the rising crude oil prices – with soy oil prices further underpinned by concerns over reduced South American exports. FAO’s Sugar Price Index rose 6.7 per cent from February, reversing recent declines to reach a level more than 20 per cent higher than in March 2021.
Higher crude oil prices were a driving factor, along with currency appreciation of the Brazilian Real, while favorable production prospects in India prevented larger monthly price increases. Meanwhile, surging pig meat prices related to a shortfall in animals for slaughter in Western Europe, drove the FAO Meat Price Index up by 4.8 per cent in March to reach an all-time high.
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