Global Food Importing Drops to a 7-year Low
Countries are experiencing lower food prices, with global food-import bill slumping to a seven-year low this year, according to the United Nations. The drop in prices, however, is not as equal when countries are compared on an individual basis.
The UN’s Food & Agriculture Organization published a report on June 2, which shows that global food-imports will drop below $1 trillion for the first time since 2009. Countries are expected to spend slightly under $990 million importing food, which is an 8.9% drop to figures in 2015.
Furthermore, the import figure is 27% lower than import costs in 2014, when the total reached $1.346 trillion. The biggest declines have been in importing livestock products and grains-based foods. These commodities are expected to drop by $30 billion and $19 billion respectively.
In addition, wheat production this year is expected to outstrip utilization. This would be the fourth consecutive year for it to happen. This information will be critical for investors looking to trade commodities in the weeks and months ahead.
Unequal benefit
But countries around the world are not seeing equal benefits in terms of the lower costs. The reduction in low-income and food-deficit countries will be much smaller than the global average. The costs in least-developed nations continue to stay almost unchanged.
There are also worries the strength in the dollar will affect nations with weaker currencies, which means that for these countries, the imports will be more expensive.
The FAO report stated, “Despite the general decline of the U.S. dollar-denominated food bills in 2016, a different picture may emerge when estimated in local currencies.”
Global weather affecting certain products
Although most food commodities are experiencing decline in importing prices, global weather has caused a storm in others. The El Nino weather pattern has driven up import costs for vegetable oils and sugar.
The estimations suggest sugar imports will increase by $2 billion. Vegetable oils are expected to go up even more with a $5 billion increase.
