Global food prices are falling from a near record | Catch My Job

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Global food prices fell from a near-record low amid prospects for fresh supplies and fears of a recession, potentially offering some respite for stressed households.

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The United Nations’ index of world food costs slipped 2.3 percent last month. While it will take time to trickle down to grocery stores, it could be good news for consumers who are also being squeezed by high prices for everything from energy to motor fuel to clothing.

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Food prices had already climbed during the pandemic, and increased even higher after the start of the war in Ukraine stifled grain exports from the country known as Europe’s bread basket. But agricultural prices have eased recently as the Northern Hemisphere harvest begins and worries about an economic slowdown weigh on commodities.

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Last month’s decline in the UN food gauge was the third straight retreat, the Food and Agriculture Organization said on Friday. However, the index is still up 15 per cent this year and the recent decline has not been as sharp as the slide seen in crop futures, which shows that consumers are still feeling the pressure.

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While grains, vegetable oils and sugar drove June’s fall in the UN food index, milk prices rose and meat costs hit new records due to tight chicken supplies amid the war in Ukraine and outbreaks of bird flu in some countries. , said the FAO.

“The rest of the year I think prices will drop a bit, but not by much to have an impact on retail prices,” FAO economist Upali Galketi Aratchilage said in an interview. Food prices could ease if a recession weakens demand for fuel, he said.

The retreat of the future

Corn, wheat and palm oil futures fell by at least 18 percent last month on concerns that an economic slowdown will reduce demand for the commodities.

On the supply side, wheat availability should rise with harvests underway in the US and Europe, while American farmers planted more corn than expected. Indonesia’s palm oil giant is increasing exports following a recent ban.

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Still, any drop in crop prices may offer limited relief for now. The UN index tracks export prices for raw goods and does not include retail markups.

Food prices are still very high and, together with expensive fuel, they are contributing to a cost of living crisis that has led to worker strikes in some countries. A more sustained decline in food prices will be needed to bring relief to stressed consumers, Arif Husain, chief economist at the United Nations World Food Program, said in an interview this week.

“At the consumer level, if retail is still where it is and food inflation is still where it is, it doesn’t help too much,” he said.

Obstacles also remain over efforts to restart the seaborne grain trade from Ukraine, which is trying to export as much as it can by rail and road. Ukraine’s corn stockpiles could reach six times their pre-war level, according to the FAO, which raised its forecast for global grain inventories in part because of that.

Wheat crop forecasts for this season have also fallen slightly due to drought in the European Union.

“The situation is still very challenging and frightening,” FAO Director-General Qu Dongyu said on Wednesday. “Furthermore, more frequent and extreme climate events are disrupting supply chains, particularly in low-income countries.”

Bloomberg.com