Dubai food festival, Emiratis food Dubai
American farmers are hoping to heap better crops and key food staples are significantly down over demand if recession bites. Image Credit: Dubai Media office

London: Global food prices dropped from near a record amid prospects for fresh supplies and fears about a recession, potentially offering some respite to strained households. A UN index of world food costs slipped 2.3 per cent last month. While it will take time to filter through to grocery stores, it could be good news for consumers who are also being squeezed by high prices of everything from energy to motor fuel to clothing.

Food prices had already climbed during the pandemic, and spiked even higher after the start of the war in Ukraine stifled grain exports from the country known as the breadbasket of Europe. But agricultural prices have eased lately as Northern Hemisphere harvests start and worries about an economic slowdown weigh on commodities.

Last month’s decline in the UN’s food gauge was the third straight retreat, the Food and Agriculture Organization said on Friday. The index is still up 15 per cent this year. Corn, wheat and palm oil futures tumbled at least 18 per cent last month on worries that an economic slowdown will crimp demand for commodities. On the supply side, wheat availability should rise with harvests underway in the US and Europe, while American farmers are planting more corn than expected. Palm oil giant Indonesia is ramping up exports following a recent ban.

Still, any drop in crop prices may offer limited relief for now. Food prices still remain very high and, along with expensive fuel, are contributing to a cost-of-living crisis that’s led to worker strikes in some countries. A more sustained downturn in food prices will be needed to bring relief to strained consumers, Arif Husain, chief economist at the UN’s World Food Programme, said.

“At the consumer level, if retail is still where it is and food inflation is still where it is, it doesn’t help too much,” he said.

Obstacles also remain over efforts to restart seaborne grain trade from Ukraine, which is trying to export as much as it can by rail and road. “The situation is still very challenging and daunting,” FAO Director-General Qu Dongyu said on Wednesday. “Furthermore, more frequent and extreme climate events are disrupting supply chains, especially in low-income countries.”