The Food and Agriculture Organization of the United Nations (FAO) Agricultural Commodity Index continued to rise in March, reaching 128.5 points.
Experts note that this indicator has risen for the second consecutive month.
Over the past year, it has increased by approximately 1%, which is quite significant. However, experts emphasize that it remains almost 20% below the peak level recorded in March 2022.
Analysts attribute the current rise in the index to both current market conditions and the reaction to rising energy prices caused by the escalation of the conflict in the Middle East.
However, according to experts, the growth was uneven across different categories of agricultural commodities.
For example, the grain index rose to 110 points in March, 1.5% higher than the February level. This increase is due to higher prices for all major crops, with the exception of rice.
Meanwhile, global wheat prices increased by 4.3%, significantly more than for grains overall.
This is primarily due to worsening crop estimates in the US, as well as a projected reduction in planted area in Australia.
This decline, in turn, is due to farmers expecting higher fertilizer prices.
However, the pressure caused by these factors was partially offset by favorable weather conditions in Europe, as well as intense competition among exporters, which arose due to continued high supply.
Meanwhile, rice prices not only remained stable, but actually declined by 3%. This was due to the arrival of the new crop, weakening import demand, and the depreciation of national currencies against the dollar, according to analysts.
Vegetable oils saw the most significant growth: the index rose to 183 points, up 5% in a month.
Global palm oil prices reached their highest since mid-2022, surpassing soybean oil. This was largely due to higher oil prices due to the Iranian conflict and lower production forecasts in Malaysia.
Sunflower and rapeseed oils also strengthened. The former was affected by a further supply contraction in the Black Sea region, while the latter was affected by an expected increase in demand for raw materials amid high global energy prices.
Experts believe that further food price movements will depend on the duration of the conflict in the Middle East, as this factor directly impacts fertilizer prices.
With no signs of de-escalation in sight, the food price index will likely continue to rise.
