FAO Food Index Continues to Rise
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The FAO Food Price Index continued to rise in November, up 1.2 percent from the previous month and 27.3 percent from November 2020. This increase, driven mostly by rising cereal and dairy prices, brought the Index to its highest level since June 2011.
The Cereal Price Index rose 3.1 percent from October and 23.2 percent from November 2020. Wheat prices reached their highest level since May 2011 as rising demand and concerns over tightening supplies, particularly from Australia and Russia, drove up prices for the fifth straight month. Strong maize sales from Argentina, Brazil and Ukraine drove up export prices slightly from those regions. Rice prices generally held steady in November due to variable demand and ongoing harvests by several Asian producers.
The Vegetable Oils Index fell by 0.2 percent from the record levels seen in October. Soy and rapeseed oil prices both declined in November due to falling demand, while palm oil prices remained steady.
The Dairy Price Index rose by 3.4 percent from October and 19.1 percent from November 2020. Tightening export supplies and dwindling stocks combined with strong demand to drive up dairy prices, particularly for milk and butter. The Sugar Price Index rose by 1.4 percent, while the Meat Price Index fell by 0.9 percent in November.
The latest edition of the AMIS Market Monitor cites the rising prices, food inflation, and other market uncertainties faced during 2021. However, the report also highlights global commodity markets’ overall resilience to disruptions caused by the COVID-19 pandemic and economic slowdowns, as well as the potential for that resilience to increase market stability in the coming year to ensure food security.
Wheat production estimates decreased in November, with global forecasts falling by 1 percent from the record set in 2020. Wheat utilization forecasts for 2021-2022 also fell due to declining feed use; however, utilization is still anticipated to be 2 percent above 2020-2021 levels. Global wheat trade is forecast to increase by 2.2 percent, while global wheat ending stocks are expected to fall by 1.7 percent below their opening levels.
Global maize production forecasts increased based on higher than anticipated production in Ukraine and the U.S. Global maize production for 2021 is now expected to set a new record. Maize utilization forecasts also increased due to rising ethanol production in the U.S. Global maize trade for 2021-2022 is expected to fall from the previous season’s record due to weaker demand from some Asian countries. Maize ending stocks are forecast to increase by 2.5 percent from their opening levels due to higher inventories in China and the U.S.
Rice production expectations for 2021 remained generally unchanged in November, while utilization is forecast to reach a new record due to a 0.6 percent increase in global food use. Rice trade is also forecast to increase due to higher exports from Thailand, Brazil, Myanmar, and Pakistan. Global rice ending stocks are expected to reach record highs.
Global soybean production forecasts rose slightly in November, while utilization expectations declined slightly. However, global soybean utilization is still expected to increase by 3 percent from the previous season. Soybean trade expectations declined in November due to smaller anticipated imports by China. Forecasts for global soybean ending stocks rose slightly based on higher inventories in Brazil and the U.S.; however, global stocks are still anticipated to be below average.