Global Grain Prices Rise for Two Consecutive Months Amid Black Sea Region Uncertainty... Average Food Prices Decline for 7 Months

[Asia Economy Sejong=Reporter Kim Hyewon] Due to increased uncertainty surrounding grain exports from the Black Sea region, global grain prices rose for the second consecutive month. However, prices for the other four commodity groups?vegetable oils, meat, dairy products, and sugar?fell, resulting in the average food price continuing its decline for the seventh consecutive month.

According to the Ministry of Agriculture, Food and Rural Affairs on the 5th, the Food Price Index released last month by the United Nations Food and Agriculture Organization (FAO) recorded 135.9, similar to the previous month’s 136.0. The global food price index has been declining monthly since reaching a peak of 159.7 in March this year. The FAO monitors international price trends for 24 commodities and publishes monthly food price indices for five commodity groups: grains, vegetable oils, meat, dairy products, and sugar. The index is based on the average prices from 2014 to 2016, set at 100 for comparison.

Last month, the grain price index rose 3.0% from the previous month to 152.3. The grain price index had fallen to 145.6 in August but increased for two consecutive months to 147.9 in September and 152.3 last month. Among these, wheat prices rose due to ongoing uncertainty over the Black Sea grain export agreement and forecasts of reduced production in the United States. Corn prices also increased due to a combination of factors including expected production declines in the U.S. and the European Union, dry weather in Argentina, and export uncertainties in Ukraine. Rice prices showed an upward trend as well, but the increase was limited due to weak demand.

Vegetable oils fell 1.6% from the previous month to 150.1. Palm oil prices declined as excess inventory in Southeast Asia remained unresolved, and soybean oil and rapeseed oil prices dropped amid expectations of increased supply. Conversely, sunflower oil prices rose due to heightened tensions between Russia and Ukraine.

The meat price index decreased by 1.4% to 118.4. Pork prices fell due to weakened demand, and beef prices declined as the volume of slaughterable cattle increased in Brazil. Poultry prices also dropped as exportable supply exceeded demand.

The dairy price index fell 1.7% from the previous month to 140.1, affected by weak demand and economic recession. The sugar price index decreased by 0.6% to 109.0, as production was expected to be favorable.

The Ministry of Agriculture, Food and Rural Affairs stated that, given the expanding uncertainty surrounding the Russia-Ukraine conflict, it is monitoring the relevant industries as well as major grain stocks and market trends. Regarding grain prices, the ministry assessed, "Following Russia’s announcement on October 29 to suspend the Black Sea grain export agreement, major international grain prices temporarily rose, but stability has been restored since Russia’s decision to rejoin the export agreement on November 2." It added, "Looking ahead, international grain prices are expected to remain generally stable, but variables such as weather conditions in South America, where planting is underway, and Russia’s response to the Black Sea grain export agreement could influence the market."