As the fight against inflation around the world nears its end, global food prices are also in the focus of governments.
While grain prices, which are among the most important food items in terms of both volume and demand on a global scale, fell, sugar prices and meat prices also decreased.
According to the global food price index report of the Food and Agriculture Organization of the United Nations (FAO), food prices decreased by 1.1 percent on an annual basis, while the Cereal Price Index decreased by 0.5 percent, the Sugar Price Index by 4.7 percent and the Meat Price Index by 0.7 percent.
According to the report, total world grain use is expected to reach 2 billion 852 million tons in 2024 and 2025, an increase of 0.2 percent compared to 2023 and 2024. Rice use is also expected to reach a record level due to the expected growth in the food purchase component.
Analysts noted that the effects of the decline in oil prices on food prices have also begun to be observed, and emphasized that falling energy costs could also have a downward effect on the prices of agricultural products.
The 7.2 percent drop in the barrel price of Brent oil in the week of September 2 stood out as the sharpest loss of value since October 2023, and last week it fell to $68.5, testing its lowest level in nearly three years.
Commodity Markets Expert Zafer Ergezen, in his assessment, predicted that food prices and production costs could decrease due to the decline in energy prices along with recession concerns.
Ergezen said that when viewed in terms of volume, the decrease in grain and cereal prices was one of the important sources of the decline in the global food price index announced by FAO.
Ergezen stated that the increase in exports, especially in wheat, in the Black Sea Region and the high production in the US and Argentina ensured that prices in the grain item remained low, and noted that one of the most important factors in the decline in grain prices was the increasing production estimates.
Ergezen stated that the low prices of corn are also prominent and that 60 percent of corn is used in the industrial field, and that corn is also used in biodiesel production, and that the demand for corn has decreased due to low oil prices.
Noting that recession concerns could push down food production costs due to the decline in energy prices, Ergezen pointed out that price pressures could come to the fore if a recession occurs.
“WEATHER CONDITIONS WILL BE THE MOST IMPORTANT FACTOR AFFECTING PRICES IN THE COMING PERIOD”
Ergezen emphasized that last year the El Nino weather event was on the agenda and that the air temperatures are expected to drop slightly with the start of the La Nina weather event this month, and said that there may be price fluctuations in wheat, corn, sugar, coffee, cotton and rice produced in South America, the Far East and India.
Stating that sugar, wheat, corn and vegetable oil prices could hinder the fight against inflation, Ergezen reminded that vegetable oil prices have reached their peak in the last 20 months.
Dr. Rahmi İncekara, a faculty member at Bahçeşehir University, also stated that oil prices affect food and agricultural prices in two ways, saying, “The first is explained by input costs and the second is explained by the demand for agricultural products used as input for alternative energy sources such as biofuels.”
Stating that the incentive for the production of agricultural products that enable the production of biofuels was determined to be particularly dependent on oil prices, İncekara noted that the decrease in oil prices could lead to a decrease in the cost of agricultural products, as it is one of the energy sources used in the production of agricultural machinery and fertilizers.
İncekara emphasized that the price of corn is positively correlated with oil prices because it is used in biofuel production and requires an energy-intensive raw material such as fertilizer, and said similar reactions could occur in soybeans.
Stating that the decline in crude oil prices reduces the demand for alternative fuel prices such as ethanol, İncekara said, “When crude oil prices fall, less sugar is used for ethanol production, so sugar prices may fall.”
