Food prices are lower but supply issues could change that

Global food prices resumed declines to the lowest in more than two years amid ample supplies of cooking oils and dairy, even as worries persist over flows of key staples from some regions. 

An index of food-commodity costs fell 2.1% last month on subdued demand and good output of vegetable oils and milk, the United Nations’ Food and Agriculture Organization said Friday. The gauge has slid 24% since hitting a record in March 2022, when Russia’s invasion of Ukraine disrupted grain exports.

Grains have been a big driver of the retreat since last year. A second bumper Russian wheat harvest has helped temper prices, and Ukrainian exports continue to flow despite the end of a Black Sea grain deal and repeated attacks on its ports. The US is also forecast to collect a near-record corn crop, although extreme heat at the end of the growing season risks curbing yields.

There are also other supply threats. India has slapped export restrictions on rice, a vital part of the diets of billions around the world, while extreme weather is affecting a variety of crops. Food inflation also remains high in many countries on the back of high energy and labor costs.

Dairy, vegetable oil and meat prices all dropped at least 3% last month, the FAO said. Its gauge of grain costs also declined, pressured by a record Brazilian corn harvest. Sugar prices rose.