According to the Food and Agriculture Organization (FAO) of the United Nations, world food commodity prices declined for the third month in a row during April, as the economic and logistical impacts of the COVID-19 pandemic resulted in significant contractions in demand for many commodities. The FAO Food Price Index, which tracks international prices of the most commonly traded food commodities, averaged 165.5 points in April, some 3.4% lower than the previous month, and 3% lower than April 2019.
The FAO Sugar Price Index hit a 13-year low, declining 14.6% from March when it posted an even larger monthly drop. Collapsing international crude oil prices reduced demand for sugarcane to produce ethanol, diverting output to producing sugar and hence expanding export availabilities. Meanwhile, confinement measures in several countries spawned additional downward pressure on demand.
The FAO Vegetable Oil Price Index declined 5.2% in April, driven lower by falling palm, soy, and rapeseed oil values. Reduced biofuel demand played a role, as did declining demand from the food sector along with higher-than-expected palm oil output in Malaysia and soy crushings in the United States.
The FAO Dairy Price Index fell by 3.6%, with butter and milk powder prices posting double-digit drops amid increased export availabilities, mounting inventories, weak import demand, and diminished restaurant sales in the northern hemisphere.
The FAO Meat Price index declined by 2.7%. A partial recovery in import demand from China was insufficient to balance a slump in imports elsewhere. At the same time, major producing countries suffered logistical bottlenecks and a steep fall in demand from the foodservice sector due to shelter-at-home measures.
“The COVID-19 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 in major livestock-producing countries,” said Upali Galketi Aratchilage, FAO senior economist, in a press release.
The FAO Cereal Price Index declined only marginally, as international prices of wheat and rice rose significantly while those of maize dropped sharply. International rice prices rose by 7.2% compared with March, due in large part to temporary export restrictions by Vietnam that were subsequently repealed, while wheat prices rose by 2.5% amid reports of a quick fulfillment of the export quota from Russia. Prices of coarse grains, including maize, by contrast, fell by 10%, driven down by reduced demand for its use for both animal feed and biofuel production.