FAO Food Price Index Rebounds in August
After declining in June and July, the FAO Food Price Index rose quickly again in August and reached 32.9 percent higher than August 2020 levels. The increase was driven by rising cereal and vegetable oil prices, as well as by rises in sugar prices.
The Cereal Price Index rose by 3.4 from July to reach 31.1 percent above August 2020 levels. Wheat prices rose by 8.8 percent from July after several major wheat exporters reported reduced harvests forecasts. Maize prices and rice prices, on the other hand, both fell in August, driven by currency movements and improved production forecasts in some regions.
The Vegetable Oil Price Index rose by 6.7 percent from July. Palm oil, rapeseed oil, and sunflower seed oil all rose in August due to tightening supplies and increased demand.
The Meat Price Index rose slightly in August, while the Dairy Price Index declined marginally. The Sugar Price Index, on the other hand, rose by 9.6 percent in July to reach the highest level seen since February 2017.
The latest version of the AMIS Market Monitor sees generally balanced commodity supplies for the 2021-2022 season. Wheat production prospects fell slightly from July based on dry conditions that reduced yields in several regions. Forecasts for wheat utilization for 2021-2022 also declined in August but growth in food, feed, and industrial uses will keep utilization around 2.4 percent higher than 2020-2021 levels. Wheat trade forecasts see a slight reduction in trade due to reduced sales from Canada, Russia, and the United States. Global wheat ending stocks are expected to fall below their record opening levels, but only marginally.
Despite reductions in forecasted harvests in Brazil and the U.S., maize production for the 2021 season is still expected to reach a record high. Maize utilization prospects rose in August based on growth in food and industrial use around the globe. Maize trade is forecast to fall from the records set in 2020-2021. Forecasts for global maize ending stocks also fell in August but are still expected to be above their opening levels.
Expected rice production declined in August, while utilization forecasts remained largely unchanged as lower food use was outweighed by higher feed and industrial use. Rice trade forecasts rose, with trade expected to grow by 1.7 from 2020. Purchases from Africa and recovering global imports will drive this increase in trade. Global rice ending stocks are expected to reach their second highest volume on record.
Soybean production forecasts fell in August but global production is still anticipated to grow by 5 percent in 2021-2022. Soybean utilization forecasts fell slightly, as did soybean trade expectations. Global soybean ending stocks are forecast down by 6.3 percent due to lower expected stocks in China and Brazil.
Fertilizer prices were generally strong in August, with continued price increases for several commodities driven by supply constraints and rising natural gas prices. Ammonia and potash prices both increased in August, due to reduced supply in major producing countries and U.S. sanctions on imports from Belorussia, respectively. Urea prices fell slightly in August in the U.S. due to the end of the growing season; dry conditions in the region also reduced demand for the product. DAP prices remained stable in the Baltic Region but decreased in the U.S. due to the end of the application season and to compensation for U.S. import restrictions on Russia and Morocco.