This archive report was first published on 7 May 2020.
On May 7, 2020, the United Nations Food and Agriculture Organization (FAO) announced that world food prices had fallen for a third consecutive month in April, hit by the economic and logistical impact of the coronavirus pandemic.
The FAO's food price index, which measures monthly changes for a basket of cereals, oilseeds, dairy products, meat, and sugar, averaged 165.5 points last month, down 3.4% from March.
The FAO sugar price index fell to a 13-year low, plunging 14.6% from March, due to reduced demand and tumbling crude oil prices that reduced the need for sugarcane to produce ethanol.
The vegetable oil price index fell 5.2%, hit by falling palm, soy, and rapeseed oil values, while the dairy index dropped 3.6%, with butter and milk powder prices posting double-digit declines.
According to FAO Senior Economist Upali Galketi Aratchilage, the pandemic is hitting both the demand and supply sides for meat, as restaurant closures and reduced household incomes lead to lower consumption and labor shortages on the processing side are impacting just-in-time production systems.
By contrast, FAO's cereal price index declined only slightly, as international prices of wheat and rice rose significantly while those of maize dropped sharply.
Rice prices rose 7.2% from March, due in large part to temporary export restrictions by Vietnam that were subsequently repealed, FAO said. Wheat prices rose 2.5% amid reports of a quick fulfillment of the export quota from Russia.
However, prices of coarse grains, including maize, fell 10% due to reduced demand for both animal feed and biofuel production.
FAO held its forecast for cereal production largely steady at 2.720 billion tonnes in 2019 but reduced its forecast for cereal utilisation in 2019/20 by 24.7 million tonnes, mainly because of the impact of the coronavirus on the economy.
FAO also unveiled its first forecasts for global wheat supply and demand in the 2020/21 marketing season, predicting world production at 762.6 million tonnes, broadly in line with the 2019 level.
