By Yusuf Khan
Food prices fell for the eighth consecutive month in November to levels just above those of a year ago, according to a report published Friday by the Food and Agriculture Organization of the United Nations.
The FAO’s food-price index, a closely watched barometer of global food prices, averaged 135.7 points in November, marginally down from the October reading of 135.9. Prices hit an all-time high in March when the index reached 159.7.
Prices are now sitting just 0.3% ahead of where they were in November 2021, led by easing cereal, meat and dairy prices, the UN body said Friday.
The UN FAO’s cereal price index averaged 150.4 points in November, down 1.3% from the October reading, though this still remains 6.3% higher than November 2021. Wheat prices fell 2.8% on month, dragged by Russia agreeing to renew the Black Sea Grain initiative , allowing for food to pass safely out of Ukraine despite the war.
Rice prices, which have been broadly steady despite the worries over grain supply this year, inched up 2.3% in November, influenced by currency appreciations against the US dollar for some Asian suppliers, the UN FAO said.
The UN FAO cut its forecast for world cereal production in 2022 by 7.2 million metric tons this month and is now pegged at 2.756 million tons, 2% lower on year, on poorer corn harvest prospects in Ukraine.
Vegetable oil prices rose by 2.3%–its first increase in seven months, driven by higher palm and soybean oil prices amid concerns over palm growing in South East Asia and strong biofuel demand soy helping to raise levels.
Dairy prices had their fifth consecutive monthly decline as they fell 1.2% from October. Prices are still 9.2% higher than they were a year ago, although supply pressures in Europe for milk powder and milk have eased.
Meat prices averaged 117.1 points in November, down 0.9% from October–a fifth consecutive monthly decline, on high bovine meat supply from Australia and Brazil. However, poultry prices rose as bird flu cut supply in producing countries.
Harvesting delays in India and higher ethanol prices in Brazil pushed sugar prices up 5.2%, their first rise in six months.
Despite the fall in commodity food prices, experts have warned that consumers are still likely to face higher prices because of volatility in key markets.
“What we’re seeing suggests that prices will stay relatively high and volatile, and that’s because supply is still constrained,” Sophia Murphy, executive director at the Institute for Agriculture and Trade Policy said in a call.
“If demand doesn’t change then suppliers can expect prices to be higher, and then inevitably, more volatile and this sort of reinforces itself,” Ms. Murphy said adding that uncertainty over the shipping corridor in the Black Sea was of major concern.
Last month, the Black Sea Grain deal was renewed, but prices had rallied and dropped as news emerged from discussions on which way the deal would go, with a high degree of uncertainty as to whether Russia would agree to the safe passage of food again.
Write to Yusuf Khan at [email protected]