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World staple food prices declined 

 

World prices for basic food decreased for the third consecutive month in April, as the economic and logistical impact of the COVID-19 pandemic has led to sharp contractions in demand for many commodities.

The FAO Food Price Index, which tracks the international prices of commonly traded products, averaged 165.5 points in April, 3.4% less than the previous month, and almost 10% less than in January.

Demand for Corn in the Market; How Coronavirus Influences It

The reduction in demand is affecting prices

The FAO sugar price index reached its lowest level in the last 13 years. It is 14.6% less than March rates when it registered an even more significant monthly drop. The slump in international oil prices reduced the demand for sugarcane for ethanol. It diverted production to make sugar, thus increasing export availability. Meanwhile, confinement measures in several countries created additional downward pressure on demand.

The FAO Vegetable Oil Price Index decreased by 5.2% in April, weighed down by falling rates ​​of palm and soybean. Lower demand for biofuels played an important role. Also, did the contraction in demand in the food sector. Along with higher-than-expected production of palm oil in Malaysia and soybean crushing in the United States of America.

The FAO Dairy Price Index was also down 3.6%, and butter and milk powder prices registered double-digit declines amid increased availability for export, extensive stocks, weak import demand, and declining sales in restaurants in the northern hemisphere.

For its part, the meat price index fell by 2.7%. The partial recovery in import demand from China was insufficient to offset the fall in imports elsewhere. Meanwhile, the central producing countries suffered logistical difficulties. Also, facing a sharp drop in demand from the foodservice sector due to containment measures.

 

Economist’s view

The FAO senior economist stated that the pandemic was affecting both the demand and the supply of meat. The closure of restaurants and the reduction of household incomes led to lower consumption. And the shortage of labor for processing is affecting production systems in major livestock countries.

The FAO Cereal Price Index fell slightly, as international prices for wheat and rice rose significantly, while those for corn fell sharply.

International rice prices grew by 7.2% compared to March. Mainly due to temporary export restrictions imposed by Vietnam, which were later lifted. At the same time, wheat prices rose 2.5% amid reports on how quickly the Russian Federation’s export quota is running out.

On the other hand, the prices of coarse grains – including corn – dropped by 10%, weighed down by the lower demand for their use, both for food production and biofuels.

 

 

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