Photo credit: Neil Palmer/CIAT

The FAO Food Price Index reached a 26-month high in November and rose almost 10 percent above November 2018 levels. This significant increase was driven mostly by meat and vegetable oil prices.

The Cereal Price Index fell by a little over 1 percent in November month-on-month. Wheat declined due to abundant export supplies and competition among the leading exporters. Rice prices fell to their lowest levels in six months thanks to recent harvests and slow import demand. Maize export prices in Argentina and Brazil rose slightly due to domestic and international demand; however, U.S. maize prices continued to decline, balancing the commodity as a whole.

The Vegetable Oil Index rose by 10.4 percent in November, reaching its highest level since May 2018. Stronger palm oil, soy oil, rapeseed, and sunflower oil prices all contributed to this increase. While palm oil increases were the most significant contributor, soy oil prices also drove up the index due to tight supplies and demand from the biofuel sector.

Meat prices rose by 4.6 percent, while sugar prices rose by 1.8 percent and dairy prices increased only marginally in November.

Abnormal and extreme weather, geopolitical upheaval, and ongoing trade tensions caused 2019 food prices to experience relative uncertainty, according to the latest AMIS Market Monitor. However, despite this upheaval, AMIS reports that the current good supply among the major AMIS crops gives hope for the 2020 market outlook.

2019 wheat production is forecast to increase from its record 2018 level thanks to larger production in the EU and Ukraine. Wheat utilization continued to rise, albeit slowly at 1.4 percent, as a result of increased food, feed, and industrial use. Forecast trade for 2019-2020 is forecast to reach its third highest level on record. Despite the increases in utilization and trade, however, wheat ending stocks are anticipated to increase by 3 percent from 2018-2019, reaching the second highest level on record.

Improved maize yields in China and the Ukraine drove up forecasted maize production levels, but harvests are still anticipated to be slightly below the record seen in 2017. An expected decline in feed use in China, the Ukraine, and the U.S. will offset the overall global increase in maize utilization for food and industry. Maize trade for 2019-2020 is forecast to slow slightly as a result of reduced sales in the U.S. but increased exports from Brazil and the Ukraine have tempered this decline somewhat. Overall maize ending stocks are forecast to increase by 8.5 million tons but to remain below their 2018-2019 levels.

Rice production for 2019 is also forecast up thanks to harvests in Pakistan, Egypt, and Nigeria. Utilization increased due to rising food use, which AMIS calculates to be increasing by 0.7 percent per capita each year. Nigeria, China, and Egypt are expected to reduce their export levels, leading to an overall reduction in rice trade for 2019-2020. Global rice ending stocks are forecast up from last month.
Soybean production forecasts fell slightly this month based on reduced harvests in South America. Soybean utilization increased slightly due to higher usage forecasts in China. Increased imports by China also increased the forecast 2019-2020 trade for soybeans, and global ending stocks are forecast down from 2018-2019’s historic highs by almost one-fourth.

Temperatures in the northern hemisphere became colder than average in recent weeks, which combined with decreasing inventories to drive up natural gas prices. Ammonia prices also rose slightly due to reduced global inventories. Urea and DAP prices, on the other hand, fell due to adequate supplies from recent harvests and reduced demand. Potash prices also fell based on weak fall application of the fertilizer in the U.S.

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