World food prices rise 0.6% in April to record first monthly hike in 2023

By Onome Amuge

The benchmark index of international food commodity prices rose in April 2023, to record its first monthly rise in the year, averaging 127. 2 points, up 0.6 per cent from 126.5 points posted the previous month,the Food and Agriculture Organization of the United Nations (FAO) has reported.

The FAO index,which monitors monthly changes in the international prices of a basket of commonly-traded food commodities, said the April rise reflected higher prices for sugar, meat and rice, which offset declines in the cereals, dairy and vegetable oil price indices.

 However, the April index, despite the recent uptrend, fell 31.2 points or 19.7 per cent below its value in the corresponding period of 2022.

According to the FAO report, the  sugar price index averaged 149.4 points in April, up 22.4 points or 17.6 percent from March, marking the third consecutive monthly increase and reaching its highest level since October 2011.

The surge in prices was attributed to heightened concerns over tighter global availability in the 2022/23 season after further downward revisions to the production forecasts for India and China, along with lower-than-earlier-expected outputs in Thailand and the European Union.

“Despite the positive outlook for the 2023 sugarcane crops in Brazil, the slow start of the harvest due to above-average rains provided additional support to prices. Higher international crude oil prices and the strengthening of the Brazilian real against the United States dollar also contributed to the overall increase in world sugar prices,” the report said.

In a similar trajectory, the FAO meat price index averaged 114.5 points in April, up 1.5 points, or 1.3 per cent from March, but  stood 7.4 points, or 6.1 percent below its value in the corresponding month last year.

International price quotations for pig meat rose the most on increased import purchases by Asian countries and the continued supply limitations in several leading exporters due to high production costs and animal health issues. In the meantime, world poultry meat prices rebounded, following nine months of continuous declines, as import demand increased from Asia, while supply limitations arising from widespread avian influenza outbreaks continued in many regions. International bovine meat prices also increased, in response to a decline in cattle supplies for slaughter, especially in the U.S. Ovine meat prices remained largely stable, as elevated export availability from Oceania nearly matched increased imports by Asian and Middle Eastern countries.

In contrast, the FAO cereal price index averaged 136.1 points in April, down 2.4 points, or 1.7 per cent from March and as much as 33.5 points, or 19.8 per cent  below its value in April 2022. The Rome-based agency noted that a decline in world prices of all major grains outweighed an increase in rice prices month-on-month.

Meanwhile, International wheat prices declined by 2.3 percent in April to their lowest level since July 2021, principally driven by large exportable availability in Russia and Australia.

According to the FAO, favourable crop conditions in Europe, along with an agreement at the end of April allowing Ukrainian grains to transit through the European Union countries that had imposed import restrictions on grain from Ukraine earlier in the month, also contributed to the overall softer tone in markets.

World maize prices also fell, by 3.2 per cent in April, mostly driven by higher seasonal supplies in South America as harvesting continued and favourable prospects point to a record output in Brazil.  However, sales to Asian buyers buoyed international rice prices during April. As a result, rice export quotations reversed most of the declines they registered in March 2023.

The FAO vegetable oil price index averaged 130.0 points in April, down 1.8 points, or 1.3 per cent from the previous month, marking the fifth consecutive monthly decline. The continued decrease of the price index reflected the combined effect of stable world palm oil prices and lower soy, rapeseed and sunflower oil quotations. On the other hand, international palm oil prices remained virtually unchanged in the reviewed period, as the downward pressure stemming from sluggish  import demand from key importing countries was offset by support from comparatively limited supplies of leading producers. World soyoil prices continued to decrease, broadly weighed by the seasonal harvest pressure from a potentially record soybean crop in Brazil, despite sharply lower production prospects in Argentina. Meanwhile, international prices of rapeseed and sunflower oils also kept falling, chiefly underpinned by lingering abundant global exportable supplies.

The FAO Dairy price index  averaged 124.6 points in April, down 2.2 points, or 1.7 per cent from March and 22.1 points, or 15.1 per cent from its level in April 2022.

During the reviewed month, international prices of milk powders declined for the tenth consecutive month, primarily underpinned by the impact of the persistent slack global import demand. Increased purchases by China and seasonally declining supplies from New Zealand prevented a potentially steeper fall in the world prices of whole milk powder, while increased current supplies from Western Europe exerted further downward pressure on skim milk powder prices.

Meanwhile,world butter prices remained largely stable, as increased supplies were generally adequate to meet increased import demand for near- and long-term deliveries.

Commenting on the rise in the food price index, Maximo Torero, FAO chief economist, noted that as economies recover from significant slowdowns, demand will increase, exerting upward pressure on food prices.

Torero described the increase in rice prices as “extremely worrisome”, while stressing that it is essential that the Black Sea initiative is renewed to avoid any other spikes in wheat and maize prices.