FAO Food Price Index Continues Nine-Month Climb
The FAO Food Price Index continued to climb for the ninth consecutive month. Food prices rose by 2.4 percent in February to reach the highest levels seen since July 2014.
The Cereal Price Index rose 1.2 percent from January 2021 and 26.5 percent from its February 2020 level. While maize prices increased by only 0.9 percent month-on-month, maize markets saw a 45.5 percent surge from February 2020, due to strong import demand and reduced export supplies. Similarly, wheat prices remained stable in from January but rose by 19.8 from last year. Rice prices also increased slightly in February.
The Vegetable Oil Price Index contributed more strongly to the overall rise in food prices in February. The Index gained 6.2 percent from January to reach its highest level since April 2012. Tight global supplies ahead of the new harvest in South America led soy prices to continue their upward trend. The price of palm oil, rapeseed oil, and sunflower seed oil also rose in February due to low inventories and reduced export supplies. Increasing crude oil prices also contributed to the rise in vegetable oil prices.
The latest AMIS Market Monitor also reported on the continued rise in commodity prices, citing strong global trade and demand. Global production is expected to keep pace with the rising demand, but the report forecasts little chance to rebuild stocks in the next five years.
Expectations for 2020 wheat production increased in February based on revisions to forecasts for Australia, the European Union, Kazakhstan, and Russia; these new expectations see global wheat production rising by 1.7 percent from 2019 to reach a new record. Wheat utilization forecasts fell slightly in February, driven by lower feed wheat usage in the EU, but utilization is still up from last year. Wheat trade for 2020-2021 is expected to surpass the previous year’s high by around 1.2 percent; the increase is being driven by larger imports from China and Turkey. Global wheat ending stocks are expected to increase by around 5.4 percent from 2020 to reach a new record.
Maize production estimates also increased in February based on increased outputs from the EU, Ukraine, Ghana, and several other African countries. Maize utilization rates are forecast to reach a record high in 2020-2021. Trade expectations fell by around 3 million tons, driven by downward revisions to EU imports and reduced deliveries in the Republic of Korea and Saudi Arabia. Global maize ending stocks are up from January but still well below 2020 levels, thanks to large reductions in stocks in China, the EU, and the US.
Expectations for rice production rose in February based on increased production in India, Tanzania, and Iran. Rice utilization forecasts for 2020-2021 rose in February as well; global per capita food intake is now expected to increase by 1 percent from last year. Trade forecasts remained unchanged in February but overall global trade is expected to increase by 7 percent from 2019-2020 to reach a three-year high. Global rice ending stocks increased slightly and are expected to reach their second highest volume on record.
Global soybean production expectations rose slightly in February based on improved weather conditions in South America. Soybean utilization forecasts also increased slightly from January, driven by higher forecasts for the US, China, and Argentina. Global soybean ending stocks were forecast down in February based on large drawdowns in the US; global inventories are expected to reach a seven-year low. Trade expectations remained largely unchanged in February.