In February, the United Nations food agency's global price index dropped for the 11th month in a row, falling 19% since reaching a record high in March 2021 following Russia's invasion of Ukraine. The index tracks the most commonly traded food commodities worldwide, and in February it averaged 129.8 points, down slightly from January's 130.6. This marks the lowest reading since September 2021.
The decline in the index is attributed to the decreased prices of vegetable oils and dairy products, which outweighed a significant increase in sugar prices. Although the price of cereal dropped only slightly by 0.1% month-on-month in February, the price of wheat increased while the price of rice decreased.
The cost of vegetable oils fell by 3.2%, while dairy prices dropped by 2.7%. On the other hand, sugar prices increased by 6.9% to reach a six-year high due to a downward revision to production in India.
The FAO also released a preliminary forecast for global wheat production in 2023, predicting a year-on-year decline to 784 million tonnes. The forecast is mainly due to financial constraints, infrastructure damage, and limited access to fields in parts of Ukraine, which resulted in a 40% reduction in the 2023 winter wheat area. However, the US is expected to increase its wheat production to 51 million tonnes due to high prices, which has led to a rise in wheat sowings to the highest level since 2015.
The FAO report also stated that the bulk of the upward revision of 9 million tonnes to the forecast for world cereal production in 2022 was due to rice, with an improved outlook for production in India. Nonetheless, this would still be 1.3% lower than the previous year.
