Photo credit: Tri Saputro/CIFOR

Strong rebounds in global vegetable oil prices, as well as sugar and dairy prices, drove the FAO Food Price Index to its highest point in five years in December. The December Index rose by 4.4. percent from November, the third such consecutive monthly increase, and reached 181.7 points.

Despite this surge, however, the overall Index for 2019 only rose by 3.3 percent from 2018 levels and remained well below the record 230 points set in 2011.

The Cereal Price Index rose by 2.2 percent in December, driven largely by increasing wheat prices. Demand from China coupled with concerns over supplies in France spurred these wheat price increases. Maize prices also rose marginally as a result of slowing trade and concerns over harvests in some major producing regions. Rice prices experienced little change in December. Overall in 2019, the Cereal Price Index fell slightly from its 2018 average, reflecting overall positive global supply conditions.

The December Vegetable Oil Price Index rose by 9.4 percent from November, reaching a 25-month high. Palm oil prices rose the most in December, but sunflower, rapeseed, and soybean oil prices also saw increases due to a combination of strengthening global import demand, tightening supplies, and reduced crushing volumes from major producers. However, the overall 2019 Vegetable Oil Price Index fell by 8.9 points from its 2018 levels to hit the lowest annual average since 2006.

The Dairy Price Index rose by 3.3 percent in December and by 3 percent in 2019 overall. The Sugar Price Index rose 4.8 percent month-to-month and by 1.6 percent from 2018 averages. The Meat Price Index remained unchanged in December but overall in 2019 rose by 5.7 percent.

The December AMIS Market Monitor highlights continuing market uncertainties but presents a cautiously optimistic market forecast for 2020 based on good global supply conditions among the major AMIS commodities.

Global wheat production increased in 2019 due mostly to larger harvests in Ukraine and the EU. Utilization rates for 2019-2020 are forecast to decrease following downgrades of feed use estimates from several countries, but overall utilization is still forecast up by 1.4 percent from 2018-2019. Wheat trade in 2019-2020 is forecast to reach the third highest level on record. AMIS expects global ending stocks for 2020 to increase by 3 percent due to larger stocks in several major exporting countries; this will put ending stocks at the second highest level on record.

Maize production also rose in 2019 thanks to improved harvests in China and Ukraine; however, maize production still remains slightly below the record reached in 2017. Maize utilization for 2019-2020 is forecast to remain largely unchanged from the previous season. Trade in 2019-2020 is forecast to decrease slightly but stronger exports from Brazil and Ukraine will offset slowing exports by the US. AMIS increased forecasts for global maize ending stocks for 2020 by 8.5 million tons; however, this forecast is still down 5.4 percent from opening-level stocks.

Increased rice production in Pakistan and several African nations outweighed reduced harvests in Thailand and Vietnam, resulting in increased 2019 production levels. Rice utilization forecasts for 2019-2020 increased by 0.7 percent on a per capita basis, while 2020 trade forecasts fell slightly based on import downgrades from Nigeria, China, and Egypt. Global rice ending stock expectations increased due to revised forecasts from India and Thailand.

Forecasts for 2019-2020 soybean production fell this month based on lower crop estimates from South America. Utilization for 2019-2020 increased slightly, largely due to higher expected use from China. Soybean trade for 2019-2020 is expected to be slightly higher as well thanks to Chinese import demand. AMIS lowered global stock forecasts, following lower predicted stocks in several countries; global stocks are expected to drop from the previous record season by almost one-fourth.

Cold winter weather in the northern hemisphere and decreased global inventories drove up natural gas prices in December. Ammonia prices also rose marginally due to slightly lowered global supplies. However, potash, DAP, and urea prices all declined in December due to a combination of slow application season in some regions, supply surpluses, and seasonally weaker demand.

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