Photo credit: 禁书网中国禁闻

The FAO Food Price Index declined somewhat in September, falling 1.4 percent from August to an average of 165.4 points. This represents a 7.4 percent decline from September 2017 levels.

The Cereal Price Index fell by 2.8 percent from August. Maize prices saw the most significant month-to-month reduction, falling by around 4 percent due to ample global supplies and prospects for a large U.S. crop. Wheat prices also declined in September due to strong exports from Russia. Rice prices experienced the smallest decline (1 percent) due in part to an appreciation of the Thai Baht.

The Vegetable Oil Price Index declined by 2.3 percent in September, driven mainly by movements in palm and soy oil prices. Global import demand for soy oil slowed in September, while large inventories of palm oil drove prices for that commodities 25 percent below September 2017 levels. Overall, vegetable oil prices reached a three-year low in September.

The Dairy and Meat Price Indices also fell in September. Sugar prices, on the other hand, experienced a 2.6 percent increase based on concerns over crop prospects in Brazil and South and South-East Asia.

The latest edition of the AMIS Market Monitor also cites falling commodity prices, but finds that fertilizer prices rose globally in September. Ammonia prices increased for the fourth month in a row, driven by strong global demand and supply shortages in Indonesia. Urea prices increased significantly as a result of anticipated winter wheat plantings in the U.S., while DAP prices rose due to higher input costs. Strong global demand drove up both potash and natural gas prices.

The Market Monitor also features a piece on the current situation in global soybean markets. According to the report, U.S. soybean exports to China reached around 36 million tonnes in 2016-2017, but these exports have all but ceased as a result of the ongoing trade war between the two countries.

The conflict is anticipated to have negative impacts for producers in both countries. The U.S. saw a bumper soybean crop this year, which has driven soybean futures prices to a ten-year low; with reduced sales to China, many producers may be forced to make distressed soybean sales during the autumn selling period. Similarly, Chinese livestock producers, particularly hog producers, are facing both falling domestic meat prices and increased import prices from Brazilian soybean producers.

The situation is also changing the players involved in the global soybean trade. With U.S. soybeans no longer a viable option, China is turning its sights to other producers – namely, India, Brazil, Canada, Mexico, and Argentina.

By: Sara Gustafson, IFPRI

Post new comment
The content of this field is kept private and will not be shown publicly.