In March, the FAO Food Price Index experienced another surge to reach the highest level since its 1990 inception. The Index rose by 12.6 percent from February, driven by all-time highs for vegetable oil, cereal, and meat prices.
The Cereal Price Index rose 17.1 percent from February. The ongoing conflict in Ukraine has disrupted wheat exports, further reducing already dwindling global supplies and driving up prices by 19.7 percent. Maize prices also soared by 19.1 percent due to expected significant reductions in exports from Ukraine. Rice prices were the outlier in March, remaining generally stable from February and 10 percent below March 2021 levels.
The Vegetable Oil Price Index rose by 23.2 percent from February. Soybean oil prices were driven up due largely to reduced exports from South America, while sunflower seed oil prices rose based on supply disruptions in the Black Sea region. Palm oil prices rose in turn due to increased demand following declining sunflower oil supplies. High and volatile crude oil prices also contributed to skyrocketing vegetable oil prices.
The Dairy, Meat, and Sugar Price Indices all also rose in March by 2.6 percent, 4.8 percent, and 6.7 percent, respectively.
The latest AMIS Market Monitor also reports price volatility and turbulent markets for major commodities as a result of the conflict in the Black Sea region. According to the report, the region accounts for about 30 percent and 15 percent of global wheat and maize exports, respectively, and about 80 percent of sunflower seed trade. As a result of the ongoing conflict, wheat and maize exports from Ukraine through June 2022 may only be a fraction of the expected 20 million tons. Ukraine’s crop production for the 2022-2023 season is also expected to fall significantly, which could cause longer term impacts for global markets. The ability of other producers to fill the gap will be limited due to a number of factors, such as poor harvests, logistical challenges, and government export caps. Soybean oil supplies are also expected to be limited due to record demand in the U.S. for biofuels and reduced harvests in South America.
Wheat production forecasts increased slightly in March, with harvests anticipated to be near the previous season’s record. Wheat utilization forecasts for 2021-2022 fell slightly due to slow growth in feed use; however, overall utilization is still anticipated to be higher than 2020-2021 levels. Wheat trade forecasts fell significantly, driven by reduced export forecasts from the Black Sea region. Global wheat ending stocks are anticipated to be higher than previously estimated; however, the report cautioned that these higher stocks will not translate to increased availability, as stocks in Ukraine will not be able to be exported until ports in the country reopen.
Maize production forecasts rose in March, with harvests expected to be 3.9 percent higher than 2020. Maize utilization is also expected to be above 2020-2021 levels (2 percent) despite reductions in feed use. Maize trade is expected to fall by 7 percent, driven by the ongoing Black Sea region conflict and reduced imports by other countries. Global maize ending stocks are forecast up, again driven largely by increased in Ukraine that will not be able to be released to global markets.
Rice production forecasts rose in March due to improved harvest prospects in Thailand. Rice utilization for 2021-2022 is also expected to rise, with increased feed use in Asia offsetting reduced food use. Global rice trade forecasts remain unchanged, with trade still expected to be 3.8 percent higher than 2021 levels. Global rice ending stocks were also forecast up, with global reserves expected to increase by 1.2 percent.
Soybean production forecasts fell in March due to unfavorable weather in South America; overall production is expected to be 5.3 percent lower than 2020 levels. Soybean utilization expectations fell as well, with global utilization forecast to fall significantly from 2020-2021. Soybean trade is expected to decrease based on smaller imports by China and reduced exports by Ukraine, Brazil, and Paraguay. Global soybean ending stocks are expected to be down overall, driven by reduced stocks in China, the U.S., and Brazil.