FAO Reports Drop in Global Food Prices, Predicts Record Cereal Production in 2023

Summary

  • The FAO’s price index, tracking global food commodities, averaged 118.0 points in January, a decline from December’s 119.1 points, as quoted by the organization on Friday.
  • January’s reading was the lowest since February 2021.
  • Global wheat export prices fell due to strong competition among exporters and the arrival of recently harvested products in the southern hemisphere.
  • Maize (corn) prices decreased as a result of enhanced crop conditions and the start of the Argentinean harvest accompanied by higher U.S. supplies.
  • The meat price index dropped for the seventh month in a row due to ample supplies from leading exporters causing a decrease in international prices of poultry, bovine, and pig meats.
  • The FAO report indicates that the world’s cereal production in 2023 forecasts an all-time high of 2.836 billion metric tons – an increase of 1.2% from 2022.
  • Global output for coarse grain was marked at a record high of 1.523 billion tons, after a 12-million-ton upward revision this month.

FAO Price Index and Commodity Prices

According to the Food and Agriculture Organization (FAO), the price index, which follows the trends of the most traded food commodities globally, averaged 118.0 points in January, declining from 119.1 in December. In fact, the index shows these reading points to be the lowest since February of the previous year.

Effects on Wheat and Maize

January saw a downfall in global wheat export prices, as revealed by the FAO. The fallout is attributable to greater competition amongst exporters and the influx of fresh supplies into the southern hemisphere. A similar downward trend followed maize (corn) prices on account of advanced crop conditions, the commencement of the Argentina harvest season, and an increase in U.S. reserves.

Meat Price Index and Cereal Production

The FAO notes a seventh-month consecutive drop in the meat price index where excessive supplies from prime exporters have brought down poultry, bovine, and pig meat prices internationally. Furthermore, the FAO report forecasts a record high in world cereal production for 2023—2.836 billion metric tons — up by 1.2% from 2022.

Global Coarse Grain Output

Moreover, the global coarse grain output is estimated at an all-time high of 1.523 billion tons, after a 12-million-ton upward revision for the month. This upward swing mainly reflects new official data from Canada, China (mainland), Turkey, and the U.S., wherein higher yields and larger harvested areas have escalated maize (corn) production estimates.

In closing, these dynamics in global food trade and pricing will likely influence forex markets, potentially impacting assets associated with export-heavy nations and commodity-based currencies.

PIP Penguin
Logo