Food is cheaper, but supply security is not guaranteed

(Patria) - Global food prices fell in January for the fifth consecutive month, according to the latest report from the United Nations Food and Agriculture Organization (FAO). The price decrease is primarily the result of lower international prices for dairy products, sugar, and meat, while grain and vegetable oil markets recorded mixed but generally stable trends.

The FAO Food Price Index in January recorded a decrease compared to the previous month, as well as compared to the same period last year. In terms of grains, abundant wheat supplies in Europe and the Black Sea region played a key role in maintaining market stability, mitigating concerns about weather conditions affecting crops in their dormant phase.

In the vegetable oil sector, sunflower oil prices increased due to limited supply from the Black Sea region, while the rapeseed oil market in the European Union remained well-supplied, partly thanks to strong imports in the previous period. These factors contributed to moderate price movements, without major disruptions in regional markets.

Meat prices continued a slight downward trend, driven by stable global supply, while dairy product prices recorded a more pronounced decrease, especially for cheese and butter, thanks to sufficient stocks. These trends further contributed to the overall decrease in the FAO Food Price Index.

The latest FAO forecasts indicate that global grain production in 2025 could reach record levels, with an increase in stocks of all major crops. The global stock-to-use ratio is expected to rise to its highest level since the early 2000s, which is an important signal of strengthening the resilience of the global food supply system.

However, the FAO warns that the current market stability should not be interpreted as a permanent reduction in risk. Such favorable trends largely depend on good yields, functioning supply chains, and stable availability of agricultural inputs, and global food markets remain sensitive to sudden shocks.

The Agricultural Market Information System (AMIS), under the auspices of the FAO, also released its monthly Market Monitor on Friday. In addition to regular market updates, the report analyzes the relative stability of international markets for major food crops, highlighting the resilience and flexibility shown in recent periods.

However, the report warns that this largely reflects a favorable combination of abundant yields, functioning supply chains, and adequate fertilizer availability, and emphasizes that it would be wrong to conclude that global food commodity markets are now structurally less vulnerable to shocks.