Customers are finding some relief in cooking oil, coffee, and avocado as rising food costs continue to devastate the world.
Prices of these items are decreasing although they still remain high in price, according to the latest food price data.
According to the agriculture commodities data company Tridge, between the end of May and the beginning of June, the prices of Indian palm oil and sunflower oil declined in the Asia-Pacific region by 7% and 12%, respectively.
Bangladesh’s palm oil prices dropped by nearly 25% during the same period.
Prices of wholesale coffee in Vietnam have fallen nearly 5% since the end of February, compared to what we were getting then.
According to Tridge, which tracks food commodity prices through the trades it facilitates, avocado prices from the largest producers, Mexico, Peru, and Colombia, have decreased on the other side of the world.
Between June and July, wholesale avocado prices in Mexico decreased by 27% while those in Colombia decreased by about 40%.
On the other hand, there are other forces at play when it comes to avocados. According to Tridge, the avocado market has been pounded by an oversupply of Peruvian avocados, which has also put downward pressure on regional avocado prices.
Fear of a recession
Food inflation and concerns about food security are prompting consumers to curtail their consumption of certain foods, even though they are necessities.
Furthermore, Minwoo Nam, a representative for Tridge, claimed that their concerns about an upcoming recession are making them cut their budgets.
“There are multiple factors affecting the market. First of all, global recession fear is dampening the demand outlook,” Nam said.
“Also because prices went too high, [so] consumers are spending less or looking for substitutes,” using sunflower oil as an illustration, he said.
Food traders and other market participants have informed Tridge that certain hedge funds are selling their commodities stakes.
However, Nam warned that just because consumers are adjusting their spending doesn’t indicate that food inflation is fully under control.
“We can say concern for food inflation has somewhat abated, but the prices of many agri-products are still high compared to average years. Contractionary policies are certainly affecting the market,” Nam said.
The economy hasn’t completely turned around, though, as Nam continued.
Shortage in the supply chain
As demand for food still continues to rise, disruption in supply chains is having a dramatic effect on the availability of food.
But according to Nam, some of the initiatives taken by governments and central banks are beginning to lower food prices, at least temporarily.
“Supply chain disruption is still affecting the market, and it is driving up the prices of many products,” Nam said.
“It doesn’t seem likely that food prices suddenly fall into recessionary territory. However, the likelihood of fiercer inflation has decreased.”
The food price index of the UN Food and Agriculture Organization declined for the third consecutive month in June, off the record in March, even though it was still close to record highs. The food index measures the monthly change in a basket of food commodities’ global prices.
According to the UN’s food agency, the dip in June was due to falls in the price of vegetable oils, grains, and sugar on the global market, but an increase in the price of milk and meat.
The FAO Cereal Price Index also revealed that, despite declining somewhat from May to June, the price of agricultural commodities like wheat is remained very high after reaching nearly record levels in May. Prices are 48.5% higher than they were at this time last year.
After months of blockade, there may be some relief as Russia and Ukraine inked an agreement on Friday to begin grain exports through the Black Sea.
Sonal Varma, chief economist for India and Asia (ex-Japan) at Nomura, stated in a note earlier this month that food prices have not yet peaked in the Asia-Pacific region because they frequently trail global movements.
Nomura predicts that the second half of this year would likely see the largest increases in food costs in nations including Singapore, South Korea, the Philippines, and India.