Blog Post

Food, fertilizer prices fall, but concerns over inflation remain

Food prices fell by 0.8 percent in January, according to the FAO Food Price Index. This latest decline brings the Index to the lowest point seen since its peak in March 2022.

The Cereal Price Index remained virtually stable in January, rising by only 0.1 percent from December. Rice prices rose due to tightened global supplies and strong demand; maize prices also rose slightly based on strong demand and poor weather conditions in South America. Wheat prices fell for the third consecutive month in January, driven by increased global supplies and higher production in Australia and Russia.

The Vegetable Oil Price Index fell by 2.9 percent in January, almost 25 percent below its January 2022 level. The decline was driven largely by falling palm oil prices. Soy oil prices also fell in January due to improved weather and production prospects in Argentina and slowing global demand.

The FAO Dairy, Meat, and Sugar Indices fell by 1.4, 0.1, and 1.1 percent, respectively.

The latest AMIS Market Monitor highlighted fertilizer prices, which, while still high, have fallen by 40 percent since spring 2021. This could mean good news for wheat and maize planting, as well as for fertilizer use rates in developing regions. 

The Monitor’s monthly editorial also addressed food price inflation. The analysis suggests that despite easing concerns about high prices, several important challenges remain when it comes to food inflation and food security around the world. These include high historical prices and tight markets for staple commodities; continuing high fertilizer prices; continued supply disruptions due to the Ukraine conflict; the impacts of climate change; domestic food inflation rates declining less quickly and less substantially than global rates; and lack of resilience in low-income countries when dealing with economic and food price shocks.

Global wheat production prospects increased in January due to revised expectations in Australia and Russia. Production could reach 2 percent higher than 2021. Wheat utilization was also forecast up due to higher feed use estimates in China and the EU. Global wheat trade was forecast up based on increased exports from Russia and increased exports from China and the EU. Global wheat ending stocks were forecast up as well due to larger inventories in Russia and Australia; stocks are expected to reach 4 percent above their opening levels.

Maize production forecasts for 2022 declined in January to reach 4.6 percent lower than 2021. The decline was driven by reduced estimates from the EU, Russia, and the U.S. Maize utilization prospects fell as well in January based on lower expected feed use. Global maize trade expectations remained stable in January, while global ending stock forecasts fell due to reduced production in Russia. Global ending stocks are now expected to be 7.3 percent lower than their opening levels.

Global rice production prospects were forecast slightly down in January based on reductions in China, while rice utilization was expected to remain close to the high seen in 2021-2022. Global rice trade expectations remained unchanged in January, with trade forecast to fall by 4.7 percent from the previous year. This decline is driven largely by reduced imports by Asian and African countries. Global rice ending stock prospects fell based on lower expected stocks in China; stocks are expected to be 2.3 percent below their opening levels but will still be the third largest on record.

Global soybean production prospects fell slightly due to reduced production in Argentina and the U.S. Utilization forecasts also declined, as did trade expectations. Lower imports are expected from China and the EU, while lower exports are expected from Argentina and the U.S. Global soybean ending stock prospects fell slightly.