International Sugar Prices Up 17.6%... "No Global Supply Issues Expected"

FAO, April Global Food Price Index

Due to an over 17% surge in international sugar prices, the global food price index turned upward last month for the first time in a year. However, the government forecasted that "there will be no significant global supply and demand issues as Brazil's crop conditions are expected to be favorable."

According to the United Nations Food and Agriculture Organization (FAO) on the 6th, sugar reached 149.4 points, up 17.6% from the previous month (127.0 points), marking the highest level since October 2011.

The main cause of the sharp rise was concerns over international supply shortages as production forecasts continued to decline in India and China, while production in Thailand and the EU was also expected to fall short of expectations. Although Brazil's sugarcane production is projected to be favorable, increased rainfall delayed harvesting, and the rise in international crude oil prices along with the strengthening of the Brazilian real against the US dollar also contributed to the increase in sugar prices.

A government official stated, "Regarding the rise in international sugar prices, since Brazil's crop conditions are expected to be favorable, there will likely be no significant global supply and demand problems," adding, "We plan to establish a close cooperative system with the industry to closely monitor market conditions and consider necessary measures to stabilize prices if needed."

The global food price index for April recorded 127.2 points, up 0.6% from the previous month (126.5 points). By commodity group, prices for cereals, oils, and dairy products fell compared to the previous month, while meat and sugar prices rose. In particular, the rise in sugar prices drove the overall increase in food prices.

The cereal price index for April was 136.1 points, down 1.7% from March (138.6 points). International wheat prices fell due to expanded export availability from Russia and Australia. European countries that had banned the export of Ukrainian grain using their own diesel agreed at the end of April to lift the ban, and favorable wheat crop conditions in Europe also contributed to the decline in wheat prices. Corn prices fell as the harvest season approached in South America and Brazil's production was expected to increase, while international rice prices rose.

The oils price index recorded 130.0 points in April, down 1.3% from the previous month (131.8 points). Palm oil prices remained largely unchanged due to weak supply from major producing countries and low demand from major importing countries. Soybean oil prices fell despite Argentina's poor production outlook, as a large soybean harvest was expected in Brazil. Canola oil and sunflower oil prices also declined due to sufficient global supply.

Meat prices rose 1.3% from the previous month (113.0 points) to 114.5 points. Beef prices increased as slaughter volumes decreased in the United States. Pork prices rose amid increased imports by Asian countries and continued supply shortages in major exporting countries due to high production costs. Poultry prices increased as supply shortages occurred due to outbreaks of avian influenza in several countries, coupled with rising demand in the Asian region.

Dairy prices fell 1.7% from the previous month (126.8 points) to 124.6 points. Powdered milk prices declined due to persistent weak international import demand. Whole milk powder prices saw limited declines due to increased imports by China and temporary supply reductions in New Zealand, while skimmed milk powder prices fell further as supply increased in Western Europe. Cheese prices dropped as temporary increases in milk supply in Western Europe boosted cheese production and expanded export availability. However, butter prices remained largely stable due to simultaneous increases in supply and demand.

The FAO projected that global cereal production for 2022?23 will be 2.7846 billion tons, a 1.0% (28.3 million tons) decrease compared to 2021?22. Global cereal consumption for 2022?23 is expected to be 2.7801 billion tons, down 0.7% (20.6 million tons) from 2021?22. Global cereal ending stocks are forecasted at 855 million tons, a 0.2% (1.4 million tons) decrease compared to 2021?22.

[Image source=Reuters Yonhap News]

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