Food, fertilizer prices continue to rise: Latest FAO Food Price Index and AMIS Market Monitor Released
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The FAO Food Price Index continued to rise in September, driven by increasing cereal and vegetable oil prices. The Index was up 1.2 percent from August 2021 and 32.8 percent from September 2020.
The Cereal Price Index rose by.2 percent from August 2021 and 27.3 percent from September 2020. Wheat prices increased the most, rising by 4 percent from the previous month and 41 percent from the previous years due to strengthened demand and tight export supplies. Rice prices also rose due to increased trade; September maize prices remained generally stable compared to their August levels but still reached almost 38 percent above their September 2020 levels.
The Vegetable Oil Price Index rose by 1.7 percent from August and by 60 percent from September 2020. Palm oil and rapeseed oil prices drove the increase; both rose due to increasing global demand and ongoing tight supplies. Soybean oil prices, on the other hand, declined due to concerns about upcoming demand from the biodiesel sector.
The Dairy and Sugar Price Indices also both increased in September, while the Meat Price Index remained stable.
The latest AMIS Market Monitor also calls attention to rising food prices against the backdrop of burgeoning post-pandemic economic activity. The report highlights that increased demand for food, rising energy prices, and increased input and transport costs could all contribute to increased food price volatility in the near-term.
Wheat production forecasts increased in September based on revisions for Australia, Canada, the EU, and Ukraine. Wheat utilization is also expected to increase by 2.4 percent from the previous year due to renewed demand for wheat for food and feed. Trade is expected to exceed the record high set in 2020-2021. Global wheat ending stocks are forecast to fall below their opening levels.
Forecasts for 2021 maize production remained unchanged in September, while utilization is forecast to rise by 2 percent due to increased feed and industrial use in several countries. Maize trade is expected to decline from the record seen in 2020-2021 despite increased demand for feed in several countries. Global maize ending stocks are expected to rise above their opening levels due to increased stocks in the US and China.
Rice production forecasts rose in September due to increased production expected in India, China, and Thailand. Rice utilization forecasts fell slightly in September but overall global utilization is still expected to reach a record high in 2021-2022. Global trade is also expected to increase based on higher expected exports from India and Thailand, particularly to consumers in Africa. Global rice ending stock forecast rose in September, with stocks expected to reach a record high.
Soybean production for 2021-2022 was forecast slightly down in September, but overall production is still expected to be above that seen in the previous year. Utilization forecasts also fell slightly in September due to weakened demand in Argentina and the US. Soybean trade forecasts remained stable in September, with trade expected to recover from the previous year’s low levels. Global soybean ending stock forecasts rose in September, but overall global stocks are still expected to recover only slightly from the previous year’s lows.
Fertilizer prices also continued to rise in September as energy and shipping costs increase around the globe. Low supplies due to supply chain disruptions and weather-related production slowdowns have driven these increases. DAP prices in particular increased to their highest levels in more than a decade.