Global food commodity prices drop further due to COVID-19: FAO

Rome [Italy], May 7 : World food commodity prices declined for the third month in a row during April as the economic and logistical impacts of COVID-19 pandemic resulted in significant contractions in demand for many commodities, the Food and Agriculture Organisation (FAO) of the United Nations said on Thursday.
The FAO Food Price Index, which tracks international prices of the most commonly-traded food commodities, averaged 165.5 points in April, about 3.4 per cent lower than the previous month and 3 per cent lower than April 2019.
"The COVID-19 pandemic is hitting both the demand and supply sides for meat as restaurant closures and reduced household incomes lead to lower consumption and labour shortages on the processing side are impacting just-in-time production systems in major livestock producing countries," said FAO Senior Economist Upali Galketi Aratchilage.
Prices of coarse grains including maize fell by 10 per cent, driven down by reduced demand for its use for both animal feed and biofuel production. The FAO said wheat production is likely to remain steady but stocks could grow further this year.
In the cereal supply and demand brief also released today, FAO unveiled its first forecasts for global wheat supply and demand in the 2020-21 marketing season.
World production is forecast at 762.6 million tonnes, broadly in line with the 2019 level, with expectations of smaller harvests in the European Union, North Africa, Ukraine and the United States almost offsetting larger harvests in India, Australia, Kazakhstan and the Russian Federation.
Wheat stocks by the close of crop seasons in 2021 are forecast to rise to 274.5 million tonnes, driven by a sizable rise foreseen in China's inventories, while in the rest of the world global stocks are projected to decline nearly 5 per cent to their lowest level since 2013.
FAO also anticipated strong maize production this year in Argentina, Brazil and South Africa where harvesting will commence soon.
FAO maintained its worldwide production forecast for 2019 -- 2,720 million tonnes -- but reduced its forecast for cereal utilisation in 2019-20 by 24.7 million tonnes, largely as a result of COVID-19 impacts on economic growth, energy markets and the demand for animal feed.
The new forecast mostly reflects reduced use of maize in China and the United States.
FAO also reduced its forecast for a worldwide total use of rice from last month, due partly to lowered food intake forecast for Nigeria, but overall consumption of rice is still expected to hit a new record led by a year-on-year expansion in food intake in Asia.
Wheat utilization in 2019-20 is also expected to increase by 1.2 per cent from the previous season on anticipation of increased food consumption.