FAO Food Price Index Released

The FAO Food Price Index held steady in November and was only 0.3 percent above its November 2021 level. Rising vegetable oil prices were checked by declines in cereal prices.

The Cereal Price Index fell 1.3 percent from October, driven largely by declining wheat prices. Wheat fell by 2.8 percent as the extension of the Black Sea Grain Initiative (for 120 days) eased concerns about supply. The initiative, coupled with improved transportation of supplies in the United States, also led maize prices to decline by 1.7 percent. Rice prices were the outlier, rising by 2.3 percent based on appreciations of some Asian currencies against the U.S. dollar. The Cereal Index remains 6.3 percent above its November 2021 level.

The Vegetable Oil Index rose by 2.3 percent after seven consecutive months of declines. Increased demand from the biofuel sector drove soybean oil prices up, while palm oil prices rose based on increased global demand and production concerns in Asia.

The Dairy and Meat Price Indices fell by 1.2 0.9 percent, respectively, while the Sugar Price Index rose by 5.2 percent.  

The latest AMIS Market Monitor also cites the impact of the renewed Black Sea Grain Initiative on cereal prices and markets. Wheat production for 2022 is expected to reach a record high, despite reduced production forecasts from Argentina due to ongoing drought. Wheat utilization is also expected to increase in 2022-2023, driven by increased demand for food use. Global wheat trade is expected to decline slightly from the previous year, while global wheat ending stocks are forecast to increase by 2.4 percent from their opening levels due to build-up in China and Russia.

Maize production for 2022 is forecast down slightly this month due to disruptions in Ukraine; total global production is expected to decline by around 4 percent from 2021. Maize utilization forecasts did not change in November, with lower feed and fuel use expected to reduce utilization by around 1 percent from the previous year. Maize trade is expected to be near the previous year’s levels due to increased exports from Brazil and Paraguay and strong import demand in the EU. Global maize ending stocks were forecast down this month, with annual stocks expected to be 6.8 percent below opening levels. Lowered stocks in Ukraine due to disruptions in production are largely behind this change.

Rice production forecasts for 2022 remained mainly unchanged this month, with production expected to decline by 2.4 percent from the record seen in 2021. Rice utilization forecasts increased based on higher feed and fuel use in China and food use in Malaysia and the Democratic Republic of the Congo. Total rice trade for 2023 is expected to decline by 2.8 percent from 2022. Global rice ending stock forecasts increased slightly this month based on higher expected stocks in the EU, Senegal, and Venezuela. However, total stocks are still expected to decline by 1.6 percent from their record opening level.

Soybean production was forecast slightly higher this month based on higher expected production in Brazil and the U.S. Soybean utilization forecasts remained unchanged, as did trade forecasts. Total trade for 2022-2023 is expected to rise by 8 percent. Global soybean ending stocks are expected higher this month due to increased production in Brazil and the U.S.

While fertilizer prices continued to fall in November, they remain at historic highs. Ammonia, urea, potash, and DAP prices all declined based on improved production and lowered demand. Natural gas prices followed suit, declining based on lowered demand in the northern hemisphere and adequate stocks.

The Monitor’s editorial this month focuses on the role of speculation in driving food market volatility. The report calls open and reliable information-sharing regarding commodity supply, demand, and prices in order to help regulate commodity futures markets and stabilize prices. It also emphasizes the need for attention and action from policymakers to address periods of excessive volatility. The Food Security Portal’s Excessive Food Price Variability Early Warning System provides one such policy tool for monitoring and tracking food price trends.