FAO Food Price Index July Update
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The FAO Food Price Index declined in June following twelve consecutive months of rising prices. The Index fell by 2.5 percent from May, driven by declining vegetable oil, cereal, and dairy prices. Despite the June decrease, however, the Index remains 33.9 percent above its May 2020 level.
The Cereal Price Index was down 2.6 percent from May, with international maize, wheat, and rice prices all declining from the previous month. After reaching the highest level seen since January 2013, maize prices dropped by 5 percent based on recent and ongoing harvests in South America and the US. However, maize prices remain more than 72 percent higher than in June 2020. Wheat prices fell less significantly, by 0.8 percent, as improved production prospects in several regions were balanced by dry conditions in North America. Wheat prices remain 31 percent higher than the previous year’s levels. Global rice prices reached a 15-month low in June based on declining export sales. Overall, the Cereal Price Index remains 33.8 percent above its June 2020 value.
The Vegetable Oil Price Index fell by 9.8 percent to reach a four-month low. Declining import demand, particularly from the US biodiesel industry, drove soy oil prices down. Sunflower oil and palm oil prices also declined based on lower demand and improved production, respectively. Rapeseed oil prices remained stable.
The Dairy Price Index declined by 1 percent in June, while the Meat and Sugar Price Indices rose by 2.1 and 0.9 percent, respectively.
The latest edition of the AMIS Market Monitor also notes declining prices and reports generally favorable production and supply prospects for major staple crops in the 2021-2022 season. The report also cautions of the continued potential for market instability due to weather risks, inflation, rising energy prices, and the ongoing COVID-19 pandemic.
Forecasted global wheat production for 2021 declined slightly in June based on decreased production in several countries. Wheat utilization expectations rose, with feed demand now expected to account for the majority of the anticipated 2.7 percent growth in utilization from 2020. Global wheat trade is also expected to grow more than previously anticipated. Forecasts for wheat stocks fell slightly in June, but total ending stocks are still expected to exceed their opening levels due to increased inventories in Australia, China, the EU, India, Morocco, and Ukraine.
Global maize production forecasts fell in June based on prolonged dry conditions in Brazil; however, maize production is still expected to reach a record high in 2021. Maize utilization is also expected to expand overall this year despite a June reduction in feed and industrial use in China. Maize trade prospects remained unchanged in June. Expectations for global maize ending stocks, on the other hand, rose significantly due to higher-than-anticipated inventories in China. Global maize stocks are expected to exceed their opening levels for the first time in four years.
Global 2021 rice production expectations rose slightly in June based on increased cropping area and higher reported yields in several countries. Rice utilization is still expected to reach a record high in 2021-2022. Global rice trade expectations increased slightly in June, but trade for 2022 is expected to stagnate. Forecasts for global rice ending stocks rose also rose slightly in June, and overall global stocks are expected to reach 5 percent above opening levels.
Global soybean production forecasts fell marginally in June based on downward revisions in Uruguay and Ukraine. Soybean utilization expectations rose slightly, and overall global soybean consumption is expected to rise by 3 percent from the 2020-2021 season. Soybean trade expectations remained unchanged in June. Global soybean ending stocks rose slightly in June based on higher production forecasts in Brazil and the US.
The Market Monitor also welcomed Mexico as the new AMIS Chair and marked the 10-year anniversary of AMIS by calling for continued collaboration and information-sharing to strengthen agricultural markets and prevent food price volatility.