By Dow Jones Newswires: Food prices have dropped for the tenth consecutive month, says UN
Food prices have fallen for the tenth month in a row, as higher exports of wheat from Russia and Australia ease inflationary pressures, a report published Friday by the Food and Agriculture Organization of the United Nations said.
The FAO’s food-price index, a closely watched barometer of global food prices, averaged 131.2 points in January 2023, down 1.1 points or 0.8% from December’s reading. Prices are now down 17.9% from the peak in March 2022, when the index hit an all-time high of 159.7 points following Russia’s invasion of Ukraine.
The U.N. body said that much of the easing had been led by lower wheat prices but that grain prices overall were more or less unchanged from December with a FAO cereal price index reading of 147.4 points in January, a rise of just 0.1%. Wheat prices had fallen 2.5% during the month on higher Russian and Australian wheat exports, but strong demand for corn had meant flat grain prices overall.
The U.N. body said that global cereal output in 2022 is now forecast at 2.76 billion metric tons – 1.7% below the 2021 outturn.
Record output of wheat is expected at 794 million tons thanks to bumper crops in Russia and Australia, however rice production is expected to slip 2.6% in 2022 on lower Chinese output.
The FAO said that lower prices might mean less winter wheat is planted in Russia, while Ukraine is likely to see winter wheat planting cut by 40% because of the war.
Meanwhile, vegetable oil prices are now 25% lower than they were a year ago, after falling 2.9% in January with an index reading of 140.4 points. The FAO said the decrease was led by lower palm, sunflower, soy and rapeseed oil prices.
Dairy prices also hit their lowest level in a year, averaging 136.2 points in January, down 1.4%. Subdued buying meant that butter prices have fallen for the seventh month in a row, with expectation prices likely to slip further. That said, world cheese prices increased slightly, driven by a recovery in food services and retail sales in Western Europe, following the new-year holidays, the FAO added.
Meat prices meanwhile, were down 0.1% from December but were still 1.3% higher than they were a year ago. Lower world prices of poultry, bovine and pig meats underpinned the decline in the index in January, FAO said.
Sugar prices fell for the first time in three months, sliding 1.1% from December on “good harvest progress in Thailand and favorable weather conditions benefiting sugarcane crop development in key growing areas of Brazil.” The FAO did highlight crop concerns in India and higher gasoline prices in Brazil incentivising more ethanol production in the region – both of which would provide support to prices.
Write to Yusuf Khan at yusuf.khan@wsj.com
