UNFood Price IndexRises for Second Straight Month Amid Climbing Meat and Cereal Costs

The United Nations Food and Agriculture Organization (FAO) reported on Friday that its world food price index increased for the second consecutive month in April 2024. The rise was driven by climbing prices of meat, cereals, and vegetable oils, which offset declines in dairy and sugar prices.

Why this matters: The rise in food prices has significant implications for global food security, particularly for vulnerable populations who may struggle to afford basic necessities. This trend could exacerbate existing issues such as hunger, malnutrition, and social unrest.

The FAO Food Price Index, which tracks monthly changes in international prices of commonly-traded food commodities, averaged 119.1 points in April. This represents a 0.3% decrease from March and a 9.6% drop compared to April 2023. The cereal price index gained 0.3% from the previous month, ending a three-month falling streak. Meanwhile, the vegetable oil price index rose 0.3% month-on-month, reaching its highest level in 13 months.

In April, the meat price index increased by 1.6% compared to the prior month, with international prices of poultry, bovine, and ovine meat all on the rise. Conversely, the dairy products index fell by 0.3%, and the sugar index saw a significant decline of 14.7% over the same period.

Strong competition among major exporters helped stabilize global wheat export prices in April, counterbalancing concerns about unfavorable crop conditions in parts of the European Union, the Russian Federation, and the United States of America. Maize export prices rose as high demand coincided with logistical disruptions in Ukraine and concerns about production in Brazil ahead of the main harvest.

The FAO All-Rice Price Index declined by 1.8% as a result of falls in Indica quotations driven by harvest pressure. "The significant decline in the FAO Sugar Price Index was led by improved global supply prospects, largely as a result of larger-than-previously-anticipated outputs in India and Thailand and improved weather conditions in Brazil," the report stated.

In its new Cereal Supply and Demand Brief, the FAO slightly raised its forecast for the world total cereal production in 2023 to 2,846 million tonnes, marking a 1.2% increase from the previous year. The forecast for world cereal utilization was also increased to 2,829 million tonnes, primarily reflecting higher than previously anticipated feed use of maize and barley.

Global maize utilization is now expected to rise by 1.6% over the year, while wheat utilization is projected to increase by 1.9%. Rice utilization, however, is expected to dip mildly. World cereal stocks are forecast to end the 2024 season at 890 million tonnes, a 2.1% increase from the beginning of the year, pointing to a worldwide cereal stocks-to-use ratio of 30.9%.

The FAO also adjusted its forecast for global wheat production in 2024, now standing at 791 million tonnes. Although this is less than previously expected, it still marks an increase of 0.5% from 2023. "The revised forecast reflects a larger drop in wheat planting in the European Union than previously expected," according to the report.

The latest FAO Food Price Index data highlights the ongoing volatility in global food commodity markets. While overall food prices remain lower than last year's levels, the second consecutive monthly increase, driven by rising meat, cereal, and vegetable oil prices, highlights the complex factors influencing food security worldwide. The world's ongoing struggle with climate change, geopolitical tensions, and economic uncertainties affecting agricultural production and trade makes close monitoring of food price trends essential.

Key Takeaways

• FAO's world food price index rose for the 2nd consecutive month in April 2024.
• Meat, cereals, and vegetable oils drove the increase, offsetting dairy and sugar declines.
• Global food security concerns persist, especially for vulnerable populations.
• FAO forecasts 2023 world cereal production to increase by 1.2% to 2,846 million tonnes.
• Global wheat production in 2024 is forecast to rise by 0.5% to 791 million tonnes.