World food prices end year where they started after dramatic run
AFTER a year marred by disruptions from the war in Ukraine and extreme weather, global food prices ended 2022 roughly where they started.
A United Nations’ index of food costs soared to a record in March, shortly after Russia’s invasion of Ukraine crippled vital flows of grain and vegetable oils from the breadbasket nation. Prices then slid as a Black Sea crop-export deal and good harvests in other growers buffered supplies, before steadying toward year-end.
The gauge – which tracks five major staples – fell 1.9 per cent in December, the UN’s Food and Agriculture Organization said in a report. That took losses for the year to 1 per cent, the first annual decline since 2018.
Prices still remain well above their 10-year average, which has added to a global cost-of-living crunch and exacerbated a hunger crisis that the UN has aimed to quash by the end of the decade.
The index tracks shifts in commodity costs and it takes a little while for changes to filter though to retail prices, which have been pushed higher by rising energy and labor costs. Food inflation has been running hot in countries from the UK to Pakistan and Brazil.
“Calmer food commodity prices are welcome after two very volatile years,” FAO Chief Economist Maximo Torero said. “It is important to remain vigilant and keep a strong focus on mitigating global food insecurity given that world food prices remain at elevated levels.”
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Weak demand for vegetable oils and beef helped drive the food index lower in December, its ninth straight monthly decline. Dairy and sugar prices rose.
Prospects for 2023 hinge on beneficial weather to boost strained crop stockpiles. The war in Ukraine that’s nearing its one-year mark is also hampering the finances of Ukrainian farmers and forcing them to leave some land unsown.
Other major growers have suffered drought, flooding and freezes. Disease outbreaks and herd cutbacks are restraining meat output, and sugar futures recently hit the highest since early 2017.
Still, Brazil is set to reap a bumper soybean crop and Russia is exporting large wheat volumes, keeping prices in check as 2023 kicks off. The economic downturn could also force consumers to cut back, pressuring food prices this year, Rabobank said in November. BLOOMBERG
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