Blog Post

FAO Food Price Index Hits Record High

The FAO Food Price Index hit a record high in February, exceeding the previous record of February 2011. The index rose 3.9 percent from January and 20.7 percent from February 2021. Vegetable oil, dairy, cereal, and meat price increases all contributed to the continued surge.

The Cereal Price Index rose 3 percent from January and 14.8 percent from February 2021. Wheat prices rose by 2.1 percent due to uncertainty stemming from supply disruptions in the Black Sea region. Maize prices rose by 5.1 percent, driven by higher wheat prices and concerns about both crop conditions in South America exports from Ukraine. Rice prices increased by just over 1 percent due to strong demand and the appreciation of exporters’ currencies against the U.S. dollar.

The Vegetable Oil Price Index rose by 8.5 percent from January to reach a new high. Palm oil prices continued their monthly increase, driven by strong global demand and reduced exports from Indonesia. Soy oil prices also rose based on reduced production prospects in South America. The continued increase in global crude oil prices also contributed to driving vegetable oil prices to record highs.

The Dairy and Meat Price Indices rose by 6.4 and 1.1 percent from January, respectively. The Sugar Price Index, on the other hand, fell by .9 percent in February.

The latest AMIS Market Monitor highlights that while March’s supply and demand forecasts remain relatively stable compared to February forecasts, global market conditions are changing rapidly, and food markets around the world continue to grapple with markedly rising prices and the continued economic impacts of COVID-19. As a result of all these factors, global food prices warrant careful monitoring.

Global wheat production for 2021 is forecast to be close to the 2020 record. Wheat utilization is expected to increase by 1.5 percent, despite declining utilization in India. Global wheat trade for 2021-2022 is forecast to reach record levels, and global wheat ending stocks are expected to be slightly above opening levels based on lower expected exports and higher historical production figures from the EU.

Global 2021 maize production forecasts rose in March due to higher-than-expected output in India and the EU; production is on track to hit a record high. Maize utilization is forecast to be 2.6 percent above the previous season due to increased feed and industry use. Maize trade for 2021-2022 is expected to drop 1.7 percent below the previous season, despite higher imports and exports by the EU. Global maize ending stocks are forecast to be 3.3 percent above opening levels.

Rice production is expected to rise 0.7 percent above the previous year, while utilization is expected to hit a record high due to increased food and feed use. Rice trade forecasts remained unchanged from February, with trade expected to rise 3.8 percent from 2021. Global rice ending stocks are forecast to exceed their opening levels by 0.9 percent.

Soybean production for 2021-2022 was forecast down in March due to unfavorable weather and crop conditions in South America; global soybean production is now expected to drop by 3.6 percent from the previous year. Soybean utilization forecasts also fell slightly in March, as did trade. Global soybean ending stocks are expected to be the lowest seen since 2013-2024 due to reduced stock forecasts for Argentina, Brazil, and China.

Fuel and fertilizer prices remain high across the board. Urea prices fell somewhat in February but rebounded strongly during the last week of the month. DAP prices were mostly stable in February but also increased significantly at the end of the month. Potash prices rose in the Baltic due to reduced supplies, while ammonia prices rose in the U.S. Gulf and remained stable in western Europe; it remains to be seen what impact the Russian Federation’s export ban on ammonium nitrate will have on prices. Natural gas prices continued to increase in February, driven largely by supply concerns.