Since March 2022, and Russia’s invasion of Ukraine, global food prices have steadily fallen, with vegetable oils even falling below their level of a year ago in August 2021, the Food and Agriculture Organization of the United Nations (FAO) announced on Friday. The FAO Food Price Index, which tracks international prices of a basket of commodities, has fallen steadily since hitting an all-time high in March following the invasion of Ukraine by Russia. In August, it therefore marked a new, more moderate decline of 1.9% over one month.
It remains, however, at still high levels, standing at 138 points in August, at a level “7.9% higher than its value a year ago”, indicates the organization.
A “moderate” increase in soy
The FAO vegetable oil price index decreased by 3.3% over one month, “reaching a level slightly lower than that of August 2021”. Abundant supplies of palm oil for export to Indonesia and the resumption of sunflower shipments from Ukraine, one of its major producers, are pushing prices down.
Only soybeans are “increasing moderately, due to concerns about the impact of unfavorable weather conditions on production in the United States”, which has suffered from high heat and lack of water this summer.
The FAO cereal price index fell by 1.4%, under the effect of “a 5.1% drop in international wheat prices, which reflects the improvement in production prospects in North America”. North and in Russia, as well as the resumption of exports from the Black Sea ports in Ukraine”.
A small decline in world cereal stocks to be expected
The organization again raised its forecast for world wheat production this month. Thanks to the harvest announced as exceptional in Russia, “at the highest level ever recorded”, and favorable weather conditions in the United States and Canada, it should reach 777 million tonnes, slightly below the production of 2021. The historic drought that has hit Europe since spring, however, promises a deplorable maize harvest, with yields falling 16% below the five-year average in the European Union.
As such, the FAO had to “significantly” revise downwards its outlook for world cereal production in 2022, all products combined. It is expected to decrease by 38.9 million tonnes, down 1.4% from the previous year, to reach 2.77 billion tonnes.
At the end of the 2022/2023 campaign, world cereal stocks should amount to 845 million tonnes, down slightly by 2.1% compared to last year. “The cereal stocks/use ratio at the global level should therefore decline slightly and stand at 29.5% (compared to 30.9% in 2021/2022), a level that is still relatively high from a historical point of view”, according to the FAO.