Prices of highly traded agricultural commodities such as wheat, rice and edible oils may come under upward pressure if the U.S. dollar continues to weaken, a World Bank report said.
The dollar is down 5 percent from April to September measured against a broad basket of currencies. Furthermore, currency movements of countries that account for a large share of global trade of particular commodities could also affect the price outlook, the Bank’s latest Commodity Markets Outlook added.
The fact that global food markets are well supplied, and prices have been broadly stable, does not imply food price stability and food availability everywhere as several places are still facing lingering impact of lockdowns, the report said.
“In addition, depreciation of some currencies increased the cost of imported food and agricultural inputs, driving up local prices,” it said.
Global supplies, which include existing stocks and production, are steadily rising for the three key grains –wheat, rice, and maize– and soybeans.
A preliminary assessment by the Food and Agriculture Organization suggests that the pandemic may add between 83 to 132 million people to the global number of undernourished this year— which stood at about 690 million people before the pandemic.
Much of the increase in undernourishment is driven by income losses due to lockdowns, further exacerbated by food price increases due to currency depreciation and income losses due to export demand collapse for exporters.
Reduced income due to the pandemic combined with higher domestic food prices has taken a toll on poverty and undernourishment. The increase in undernourishment comes on top of growing undernourishment trends observed since 2015.