FEWS Net Reports Stable Global Staple Food Prices, Supplies But Varied Country-level Conditions

In the latest Monthly Price Watch , released by FEWS Net on April 29, international prices of maize, wheat, rice, and soybeans were reported stable in March, and below their respective 2015 levels. The report also sees well supplied international markets for these staple foods.

In terms of global production, projects for rice are slightly below the record levels seen in 2014-2015 due to the effects of the 2015-2016 El Niño cycle in Asia. World demand for rice is expected to exceed production, and global rice stocks could decline for the first time since 2005 as a result. Maize production is also predicted to fall slightly below last year’s record level, but global demand is thought to remain stable from 2014-2015; this means that global maize stocks will likely remain well above average. Global wheat production is expected to increase from last year’s levels, leading to a 13-year high for wheat ending stocks. Due to this large supply, global wheat prices are expected to be well below average. Soybean production and stock levels should both remain stable from last year’s record levels, but global demand may grow due to increased demand from Asia and South America.

The report notes, however, that staple food prices at the country level are expected to vary considerably in the coming months due to local and regional market conditions, and that international markets will play a limited role in most of the regions monitored by FEWS Net.

In West Africa, market supplies are expected to remain stable and adequate, even as stocks decrease and demand grows during the start of the lean season. Seasonal price increases will be limited by various government food subsidies and price stabilization measures, FEWS Net reports. The situation is a more varied at the country level, however. Rice prices increased in Mauritania in February and March, and maize prices increased in Burkina Faso, Chad, and Niger during the same period. Nigeria is of particular concern in this month’s report, with the price of all key food items increasing in March and exceeding both their 2015 levels and their average levels due to unfavorable market conditions in the country. The Nigerian Naira has depreciated rapidly in 2016, widening the gap between official and parallel market exchange rates. Nigeria depends strongly on imports of rice, wheat, cowpeas, and livestock, and the current macroeconomic situation has limited importers’ purchasing power. The report expects food prices to continue to increase beyond normal levels and to be relatively higher in the Northeast area of the country, where market function is constrained and where transaction costs remain high.

In East Africa, markets are well supplied in Uganda and Tanzania, seeing only seasonal price shifts (increases in maize and sorghum prices in Uganda and decreases in maize prices in Tanzania). Kenya’s staple food prices also remained stable in Kenya as rains progressed in the North Rift and regional imports strengthened rice, maize, and bean supplies. In Ethiopia, on the other hand, both 2015 Belg and 2015 Meher harvests were below average, widening the national consumption gap. Recent Meher harvests were more normal, leading to a decline in staple food prices; however, this decline was not as rapid as is normally seen after the Meher season.

In southern Africa, the 2016 maize harvest is expected to be below average and delayed by at least one month. Maize supplies have been significantly tighter than usual due to El Niño effects, and the report predicts that many countries will face maize shortages throughout 2016-2017 marketing year. As a result, regional prices are not expected to decline as much as they normally do during and after the harvest period. Maize prices are expected to remain well above their five-year average across the region, and price increases could be especially high in Malawi and Mozambique due to these countries’ large supply deficits, depletion of public stocks, limited imports, and below average 2016 harvests.

Supplies of both red and black beans are stable in Central America and the Caribbean due to successful Postrera and Apante harvests and to imported supplies. Regional bean prices should see only seasonal increases through August; red bean prices will be generally above average levels, especially in Nicaragua, but will remain below the abnormally high levels seen in 2014. White maize prices have generally been stable across the region, with imports from the US and Mexico filling supply gaps; the exception to this is in Nicaragua, where white maize prices have increased due to below average supplies. Maize prices are expected to increase to above average levels in Nicaragua, Honduras, and El Salvador in the coming months but will remain normal or slightly below average in Guatemala until the August harvest. The 2016 Primera maize harvest is forecast to be below average to average, but this will depend on the ultimate effects of El Niño weather patterns and the strength of the hurricane season. In Haiti, local black bean and maize prices are expected to increase due to increase demand, and depreciation of the Haitian Gourde could impact rice and wheat import volumes and prices. Staple food supplies in the country have been adequate in recent months.

By: Sara Gustafson, IFPRI