The FAO Food Price Index Continues to Decline
Marking the third consecutive monthly decline, the FAO Food Price Index fell 2.3 percent in June 2022 from the previous month, driven by declines in vegetable oils, sugar, and cereal prices while meat and dairy prices rose. Despite this continued decline, the index is still 23.1 percent above June 2021 levels.
The Cereal Price Index dropped 4.1 percent from May but is still 27.6 percent above June 2021 levels. Despite highs in May, wheat prices declined by 5.7 percent due to new harvests in the northern hemisphere, improved crop conditions for major producers, high production prospects from the Russian Federation and a decline in global import demand. Maize prices also fell by 3.5 percent, driven by pressure from seasonal availability in Argentina and Brazil and improved crop conditions in the United States. Rice prices rose in June due to demand for Indica and basmati rice.
The Vegetable Oil Price Index declined by 7.6 percent from May due to drops in palm, sunflower, soy, and rapeseed oils prices. Palm oil prices continue to fall, driven by rise in outputs for major producing countries and an increase in export supplies from Indonesia. Sunflower and soy oil prices are also declining due reduced global import demands following a period of rising costs.
The Dairy Price Index and the Meat Price Index rose 4.1 percent and 1.7 percent from May. Unlike dairy and meat, the Sugar Price Index fell 2.6 percent from May, reaching its lowest level since February.
The latest AMIS Market Monitor addresses the ongoing changes in agricultural markets, including changes in production, utilization, stocks, and outlooks for trade. The featured article highlights outcomes from the Twelfth WTO Ministerial Conference and emphasizes the need for constructive and sustained engagement to address issues such as export restriction and prohibitions which contribute to price volatility and inflation. Ongoing crises such as Covid-19 and the conflict in Ukraine continue to impose challenges on agricultural markets specifically reflected in major commodities like wheat.
Wheat production is predicted to drop for 2022 as production prospects are lower in the EU, Argentina, and Iraq. Wheat utilization is expected to increase from the previous month but decline from 2021-2022 values due to a drop in demand for feed use and industrial use. Wheat trade is also anticipated to rise, driven by demand from Asia and larger shipments from Australia and Russia. Global wheat ending stocks are forecasted to remain near opening levels due to buildups in Canada, China, Russia, and Ukraine which counteract drawdowns.
Maize production is anticipated to rise due to improved outlooks in China, India, Russia, and Ukraine, albeit still 1.2 percent below 2021 levels. Maize utilization is forecasted to increase, driven by stronger than anticipated feed demand, yet still set to decline 0.3 percent from 2021-2022. Maize trade outlook rose in June due to higher-than-expected demand from the EU and shipments from Brazil, yet trade is still expected to decline from 2021-2022 by 3.0 percent. Global maize ending stocks are predicted to remain near opening levels from revisions in China, Ukraine, and the US.
Rice production is forecasted to rise in 2022 as production in India counteracts declines in Viet Nam’s 2022 outlooks. Rice utilization is predicted to exceed its year-earlier record by 1.1 million tonnes as global per caput food use steadies. Rice trade is anticipated to change slightly as India is forecasted to remain the world’s largest exporter. Global rice ending stocks are forecasted to still be at their second highest despite downward adjustments to carry outs in Cambodia and Viet Nam.
Soybean production is forecasted to be slightly lower from the previous month due to downward revisions in the US. Production is also expected to rebound, reaching a new year to year record high. Following a large contraction in 2021/22, soybean utilization is expecting a 2.7 percent year to year recovery due to lower forecasts for the US and China. Soybean trade is predicted to remain unchanged from the previous month as fewer export prospects for the US are counteracted by shipments from Brazil. Soybean stocks are forecasted to scale down slightly due to reductions in the US, however, global ending stocks are predicted to rebound by more than 20 percent.
Lexie Goldman is a Borlaug-Ruan intern with IFPRI's Markets, Trade, and Institutions Division (MTID).