Food Prices Continue to Rise: Latest FAO Food Price Index Released
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The FAO Food Price Index continued its climb in October, rising by 3.1 percent from September to reach its highest level since January 2020. The price of cereals, vegetable oils, sugar, and dairy all rose in October.
The Cereals Price Index increased by 7.2 percent from September and as much as 16.5 percent from October 2019 levels. Rising wheat prices are being driven by strong global demand, reduced export supplies, and production concerns in several major producing regions. Maize prices reached six-year highs in October, due largely to increased purchases from China, increased stock usage in the U.S., and reduced exports from Brazil and Ukraine. In contrast, global rice prices fell to seven-month lows due to the start of the major harvest season in Asia.
The Vegetable Oils Price Index rose 1.8 percent in October to reach a nine-month high. Limited supplies in South America drove soy oil prices up, while palm oil prices rose due to reduced production prospects in several regions and strengthening global import demand. Rapeseed oil prices fell in October based on declining demand in the EU.
Sugar and dairy prices rose by 7.6 percent and 2.2 percent, respectively. In contrast, meat prices fell by 0.5 percent.
The latest AMIS Market Monitor was also released last week. The report saw lowered production and ending stock forecasts for several major commodities. While global food markets have remained resilient thus far in the face of COVID-19, the report cautions that regional and national markets have faced more challenges and that the anticipated second wave of the virus could worsen poverty and hunger around the world.
Wheat production forecasts fell by 2.2 million tons in October due to reduced output expectations in Ukraine and Argentina. Wheat utilization for 2020-2021 is forecast to increase by 1 percent based on upward adjustments in the EU, Pakistan, and the U.S. Wheat trade is also forecast to increase due to rising demand and subsequent larger shipments from several regions. Trade in 2020-2021 could exceed the record set in 2019-2020. Expectations for global wheat ending stocks fell in October by 3.8 million tons due to reduced supplies from several major exporters, including the Eu, Russia, and the U.S.
In 2020, maize production is expected to fall sharply based on reduced prospects in the EU, U.S., and Ukraine. However, global production remains high and is anticipated to reach a record high. Maize utilization is forecast to increase due to rising non-food usage in several countries, particularly China. Trade for 2020-2021 is also forecast to increase based on rising import demand from the EU, Asia, and South America. Trade is also anticipated to reach a record high. Global maize ending stocks are expected to fall for the third straight year.
Global rice production is forecast slightly down this month, driven by reduced production in Myanmar and Nigeria. Rice utilization is expected to rise by 2.5 percent due to increased per capita food use in Asia. Global trade is expected to increase for the first time in four years based on increased demand in several Asian countries; however, it will still not reach previous records. Global rice ending stocks are not expected to change substantially in 2020-2021, as several major exporters have accumulated higher stocks. AMIS reports several countries’ stock-to-disappearance ratio could rise to a seven-year high.
Soybean production prospects fell slightly in October due to revisions in area and weather conditions in the U.S. and Brazil. However, global soybean output is still expected to reach a record high this year. Utilization forecasts remained largely unchanged. Soybean trade is expected to rise slightly due to increased exports from the U.S. Global soybean ending stocks are forecast to decline to a three-year low based on sharply reduced stocks in the U.S.