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The FAO Food Price Index plunged to a 17-month low in May, driven in large part by sustained negative economic impacts of the COVID-19 pandemic. Prices across all sub-indices declined with the exception of sugar prices.

The Cereal Price Index fell by 1 percent month-on-month. Wheat prices fell by almost 2 percent due to ample global supplies and slowing global trade ahead of harvests in the northern hemisphere. Abundant supplies also drove down both U.S. and international maize prices; U.S. maize prices reached almost 16 percent below their May 2019 levels. Global rice prices, on the other hand, rose slightly in April.

The Vegetable Oil Price Index fell by 2.8 percent to reach a 10-month low. Palm oil prices led the decline. High than expected production and inventory in several major exporting countries combined with concerns over the COVID-19 pandemic and subsequently decreased mineral oil prices to drive down palm oil prices.

The Meat and Dairy Price Indices declined by 0.8 percent and 7.3 percent, respectively, in May. The Sugar Price Index is the only commodity covered by the monthly FAO report that experienced an increase, rising 7.4 percent after lower than expected production.

While the latest AMIS Market Monitor forecasts generally stable commodity prices for the 2020-2021 season as a whole, it does highlight several important risk factors that could contribute to market uncertainty and further price declines for staple foods. These include movements in energy prices; demand for feed and biofuel; movements in currency, particularly the U.S. dollar; trade and domestic support policies; and potential supply chain disruptions. All of these factors will need to be continued to be monitored in order to understand and forecast their impact on global and regional staple food prices.

The AMIS report also presents an overall optimistic outlook for global staple food production, trade, and inventories in 2020.

Wheat production for 2020 was forecast slightly down this month based on unfavorable weather conditions in the EU, Russia, and the Ukraine. Wheat utilization expectations for 2020-2021 also declined from the previous year due to forecasts of reduced feed and industrial use. However, AMIS forecasts expect wheat trade to increase thanks to higher imports by Iran, Sudan, and Egypt and increased exports from Australia, Argentina, and Canada. Overall global wheat ending stocks are forecast up from the previous year by 1.5 percent.

AMIS forecasts expect maize production for 2020 to exceed the record set in 2019 by as much as 5.6 percent. This growth in production is being driven by record harvests in the U.S., Canada, and Ukraine, as well as abundant harvests in Brazil and Argentina. Maize utilization forecasts see use rebounding in 2020-2021 due to increased demand for both ethanol and feed. Maize trade will expand due to high export availabilities and lower prices, and global ending stocks are expected to reach an all-time high.

Rice production in 2020 is expected to set a new record thanks to favorable weather and price levels more attractive to farmers than previous seasons. Rice utilization will also increase; AMIS estimates that global per capita rice food use will grow by 0.6 percent. Rice trade will recover slowly in 2020 but ample export supplies may support stronger trade in the 2021 season. Overall global ending stocks will reach their third highest on record.

Soybean production for 2020-2021 is expected to recover from the decline seen the previous year thanks to average yields and slightly increased plantings. Utilization will also recover from the previous year, with China, Brazil, Argentina, and the U.S. leading the way in increased use. Soybean trade is forecast to continue its expansion of 2-3 percent per year, driven by increased demand from China and increased supply from the U.S. Overall global ending stocks may fall slightly.

Most fertilizer prices continued their downward trend this month due to falling demand and concerns over potential disruptions to food supply chains. The price of both ammonia and urea fell significantly across the world; ammonia declined by 10-12 percent from the previous month, while urea fell by more than 15 percent. In the U.S., DAP prices also declined; however, DAP saw an increase in prices in the Baltic region due to a decline in production in China. Potash prices fell due to an adjustment to existing inventory reports. Natural gas prices increased slightly thanks to reduced COVID-19 lockdown measures and an agreement by OPEC to slow oil production. However, natural gas prices remain 33 percent lower than their May 2019 levels.

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