Global Food Pricesat All-Time-Highs
Global food prices have surged to unprecedented highs in March 2022 according to the U.N. Food and Agriculture Organization (FAO). The food price index reached 159.3 points, climbing 13 % higher m/m and 60% higher compared to the 2014-2016 base period. The global cereal and vegetable oil prices also hit record highs of 170.1 points (17% m/m) and 248.6 points (23% m/m), respectively.
Prices for foodstuffs have been rising sharply for the last two years as a result of growing demand, and higher fertilizer and fuel prices have added to the cost of producing food.
February 2022 figures showed that the food prices were already at an all-time high because of limited global supplies. The war between Russia and Ukraine only made the matter worse, weighing on agricultural markets, complicating the logistics, and creating doubt on whether international markets will be provided with sufficient food to meet the import needs of the expanding global population. Both countries are the main producers and exporters of wheat as well as several other commodities.
Due to a lack of demand triggered by the pandemic-induced lockdowns, global food prices had decreased to a four-year low (91.1 points) in May 2020. The fast recovery of global demand has been the key driver of the rebound in international agricultural commodity prices.
There is no sign of stabilizing food prices in 2022. Shortages of certain foodstuffs such as wheat and sunflower oil and fertilizer are not still away.
Despite the impact on food exports due to the war in Ukraine, the FAO “Cereal Supply and Demand Brief” forecasts global wheat production in 2022 will reach 784 million tonnes (1.1% y/y). This is because of favorable production trends in regions like China, India, North America, and the European Union, which could help stabilize global markets and ensure food safety for people who are at risk of hunger.
Report by Özge Gürses | Macro Research at EquityRT
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