Latest FAO Food Price Trend Report Reports Decline in International Cereal Prices
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The FAO’s monthly report on food price trends was released on August 10th. The bulletin reports on recent food price developments at the global, regional, and country levels, with a focus on developing countries and provides early warnings for high country-level food prices that may negatively affect food security.
The key messages in this month’s report are that international cereal prices declined significantly in July. More specifically, the benchmark US wheat price averaged 188 dollars per tonne in July, which is down 5 percent from July and more than 20 percent below its level of one year ago. These price decreases were mainly driven by an expected bumper harvest in Northern hemisphere countries, most notably the Black Sea region. Similarly, the benchmark US maize prices averaged around 161 dollars per tonne in July, which is 11 percent lower than it was in June. These decreases were mainly due to global increased yield projections, especially in the Black Sea region and Argentina, which more than offset reduced forecasts for maize production in Brazil.
Several countries received domestic food price warnings this month. These warnings mean that the price of one or more basic food commodity are at abnormally high levels that could negatively impact access to food. The countries that received warnings include Argentina, Bolivia, Brazil, Chile, Lesotho, Malawi, Myanmar, Namibia, Nigeria, Peru, South Africa, and South Sudan. In Argentina, yellow maize prices were relatively stable but at record levels due to strong export demand, inflationary pressures, and a weak currency. In Bolivia, maize prices increased sharply for the second consecutive month due to a reduced main summer crop caused by a reduction in the area under cultivation, drought conditions, and high pest infestations. In Brazil, maize experienced a significant price decrease in July; however, prices remain two-thirds higher above their levels from last year due to adverse weather conditions which sharply reduced yields. In Chile, maize prices remained unchanged in July but remain significantly higher than last year’s levels due to a decline in the area under cultivation and adverse weather conditions.
Similarly, in Lesotho and Malawi, maize prices remain high due to an El-Niño induced drought. In Myanmar, the price of rice (the country’s main staple) remained near record levels in July due to two consecutive years of relatively poor harvests. In Namibia, despite slight decreases, maize prices remained high due the ongoing regional drought and increased import costs. In Nigeria, coarse grain prices continued to increase in July and are at high levels; for instance, millet and sorghum prices are more than 80 percent and 100 percent higher, respectively, than in July 2015. Peru and South Africa also continued to experience high maize prices. In South Sudan, food prices in general soared to all-time highs, with cereal prices more than doubling over their June levels. These increases were driven by increased insecurity which disrupted trade flows, reduced market activities, and reduced supplies.
At the sub-regional level, West Africa saw increases in the prices of locally grown millet, sorghum, and maize, the main staples of the sub-region. In the Sahel belt in West Africa, coarse grain prices remained stable overall thanks to adequate supplies. In Niger, prices recorded some seasonal increases in northern and eastern markets. By contrast, in coastal West African countries, prices were significantly higher than at the same time last year in most markets, after consecutive increases in previous months. In Nigeria, the steep depreciation of the Naira continued to place upward pressures on local and imported food prices.
In Southern Africa, maize prices showed mixed trends in July and generally remained at high levels. In South Africa, maize prices decreased due to a strengthening of the South African rand and seasonal harvest pressures. In Zambia, maize prices increased seasonally, while in Malawi and Zimbabwe, they increased due to poor harvests.
In Eastern Africa, the price of locally produced cereals increased in June following seasonal patterns. In Kenya and Tanzania, maize prices increased but remain below their year-earlier levels due to adequate stocks. In Sudan, on the other hand, prices of locally produced sorghum and millet, the country’s main staples, were about 50 percent higher than their July 2015 levels.
Similarly, in Central America, most countries experienced increases in white maize prices in July. In Guatemala, Nicaragua, and Honduras, maize prices rose in July to significantly above their July 2015 levels. In Mexico, the largest maize producer of the sub-region, prices remained virtually unchanged.
In East Asia, domestic rice price trends were mixed in exporting countries and stable elsewhere after increases in recent months. In Vietnam and Thailand, rice prices declined slightly due to a good 2016 crop and decreases in export demand. In India, prices increased slightly due to a slight decrease in estimated rice production. In Thailand and Indonesia, rice prices were virtually unchanged in July.
In South America, yellow maize and wheat prices showed mixed trends in the region in July but remained generally high. In Argentina and Brazil, the main maize-producing countries, the ongoing harvests halted previous months’ price increases, leading to price stabilization in Argentina and price decreases in Brazil. In Bolivia and Ecuador, maize prices increased significantly due to reductions in the predicted output of the second season crop. Wheat prices decreased slightly in Argentina, while Brazil and Bolivia experienced wheat price increases.
All the data used in the analysis can be found in the FPMA Tool .