Food, Fertilizer Prices Decline in February
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The FAO Food Price Index continued to drop slightly in February, reaching almost 19 percent below its March 2022 peak. This represents the eleventh consecutive month of decline.
The Cereal Price Index fell 0.1 percent in February; however, it remains about 1.5 percent higher than its February 2022 level. Wheat prices rose slightly in February due to dry conditions in the U.S. and strong international demand. Maize prices also rose marginally, by 0.1 percent, due to declining production conditions and delayed planting in South America. Rice prices fell by 1 percent as trade slowed and several Asian countries experienced currency depreciation against the U.S. dollar.
The Vegetable Oil Price Index fell by 3.2 percent in February to reach its lowest level since the start of 2021. Soy prices declined due to slowing demand and anticipated higher production in South America.
The Dairy and Meat Price Indices also both declined in February, by 2.7 and 0.1 percent, respectively. The Sugar Price Index, on the other hand, jumped 6.9 percent from January.
The latest AMIS Market Monitor cautions that while overall good weather conditions and supportive responses from major suppliers have limited the impact of the Ukraine conflict on global food prices, tight global stocks and continued price volatility remain a concern. This month’s editorial focuses on the risks the conflict has posed to prices, trade policy, and logistics.
Wheat production forecasts for 2022 were up in February, with production expected to reach 2.1 percent above 2021 levels. Wheat utilization forecasts also rose due to higher feed estimates in the EU. Global wheat trade expectations remained generally stable, while global ending stocks are still expected to rise by 4.1 above their opening levels.
Maize production expectations for 2022 rose in February but remain 4.5 below 2021 levels; this year-on-year fall is the result of declining production in the EU, Ukraine, and the U.S. Maize utilization expectations fell in February driven by lower feed use. Trade expectations remained stable for maize as well, while global maize ending stock forecasts declined due to lower estimates in Brazil. Maize ending stocks are now expected to fall by 8.3 percent below their opening levels.
Rice production forecasts for 2022 rose due to increased expectations in India. Rice utilization expectations also increased slightly in February due to rising non-food uses in Asia. Rice trade forecasts remained unchanged. Global rice ending stock forecasts rose due to revisions in several countries, particularly India; stocks are expected to reach their second highest level on record.
Soybean production expectations fell due to reductions in South America. Soybean utilization forecasts also fell slightly, resulting from reduced crushings in South America and the U.S. Global soybean trade expectations remained stable, while global ending stock forecasts fell slightly due to slowing production prospects in South America.
Fertilizer and natural gas prices both continued to decline in February. Natural gas prices reached their lowest levels since the start of the Ukraine conflict. The price of ammonia, urea, and potash all fell in February due to adequate supplies, reduced production costs, and slowing demand. DAP prices remained generally stable in February.