Global food prices reach highest value in a decade, says FAO

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Geneva, 4 Jun (Kanaga Raja) – The international prices of a basket of key agricultural food commodities rose sharply in May, to reach their highest value since September 2011, the UN Food and Agriculture Organization (FAO) has said.
According to FAO, its Food Price Index (FFPI) averaged 127.1 points in May 2021, 5.8 points (4.8 percent) higher than in April and as much as 36.1 points (39.7 percent) above the same period last year.
“The May increase represented the biggest month-on-month gain since October 2010. It also marked the twelfth consecutive monthly rise in the value of the FFPI to its highest value since September 2011, bringing the Index only 7.6 percent below its peak value of 137.6 points registered in February 2011,” said FAO.
The sharp increase in May reflected a surge in prices for oils, sugar and cereals along with firmer meat and dairy prices, it added.
The FAO Food Price Index is a trade-weighted index that tracks the monthly change in the international prices of a basket of key food commodities.
According to FAO, its Cereal Price Index averaged 133.1 points in May, up 7.6 points (6.0 percent) from April and 35.7 points (36.6 percent) above its May 2020 value.
FAO said that among the major cereals, international maize prices rose the most, gaining 12.9 points (8.8 percent) in May, reaching 75.6 points (89.3 percent) above their value last year and their highest level since January 2013.
“Downgraded production prospects for Brazil added pressure to already tight global supplies amidst sustained strong demand,” it added.
However, towards the end of the month, maize prices started to retreat, mostly in expectation of higher production prospects in the United States.
FAO said that international barley and sorghum prices also increased in May, rising by 5.4 percent and 3.6 percent, respectively.
Following a surge in wheat prices in early May, improved crop conditions, particularly in the European Union and the United States, led to sharp price declines by the end of the month, it added.
However, wheat prices still averaged 8.0 points (6.8 percent) up from April and 27.7 points (28.5 percent) above May 2020.
International rice prices held steady in May, with logistics and shipping costs keeping trading activity subdued through the month.
The FAO Vegetable Oil Price Index averaged 174.7 points in May, gaining 12.7 points (or 7.8 percent) month-on-month and marking a twelfth consecutive monthly rise.
“The continued strength of the index mainly reflects rising palm, soy and rapeseed oil values,” said FAO.
According to FAO, international palm oil quotations remained on an upward trajectory in May and reached their highest level since February 2011, as slow production growth in Southeast Asian countries, together with rising global import demand, kept inventories in leading exporting nations at relatively low levels.
FAO said prospects of robust global demand, especially from the bio-diesel sector, lent support to soy oil prices, while international rapeseed oil values were underpinned by continued global supply tightness.
According to FAO, its Dairy Price Index averaged 120.8 points in May, up 1.7 points (1.5 percent) from April, marking one year of uninterrupted increases and lifting the value 26.4 points (28 percent) above its level of one year ago.
However, the index is still 22.8 percent below its peak value reached in December 2013, it said.
In May, international quotations for skim milk powder rose the most, reflecting solid import demand amid limited spot supplies from the European Union.
FAO said international quotations for whole milk powder increased on high import purchases, especially by China, despite New Zealand’s offer of large sales.
FAO said that cheese quotations also strengthened, mostly due to lower supplies from the European Union amidst strong demand.
On the other hand, butter prices fell on increased export supplies from New Zealand, marking the end of an eleven-month-long price rally.
The FAO Meat Price Index averaged 105.0 points in May, up 2.3 points (2.2 percent) from April, registering the eighth monthly increase and lifting the index 10 percent above its level of one year ago, but still, nearly 12 percent below its peak reached in August 2014.
In May, price quotations for all meat types represented in the index rose, principally underpinned by a faster pace of import purchases by East Asian countries, mainly China, said FAO.
“Tightening global supplies also provided price support across all meat products, reflecting multiple factors ranging from slaughter slowdowns in the cases of bovine and ovine (lamb and mutton) meats to rising internal demand for poultry and pig meats in leading producer regions.”
According to FAO, its Sugar Price Index averaged 106.7 points in May, up 6.8 points (6.8 percent) from April, marking the second consecutive monthly increase and the highest level since March 2017.
“The rise in international sugar price quotations was mostly related to harvest delays and concerns over reduced crop yields in Brazil, the world’s largest sugar exporter, as the prolonged dry weather conditions impacted crop development,” said FAO.
Additional support was provided by higher crude oil prices and a further strengthening of the Brazilian Real against the US dollar, which tends to restrain shipments from Brazil, it added.
However, FAO said that large export volumes from India contributed to easing the price surge and prevented larger monthly price gains.
RECORD CEREAL OUTPUT IN 2021
Meanwhile, in a separate Cereal Supply and Demand Brief, FAO said that current prospects for world cereal production point to a third successive year of moderate growth.
FAO said its first forecast for world cereal output in 2021 is now pegged at nearly 2,821 million tonnes (including rice in milled equivalent), a new record and 1.9 percent above the out-turn in 2020.
The bulk of this year’s foreseen growth relates to maize, with output anticipated up 3.7 percent from 2020, it added.
Global wheat production is also expected to increase, up 1.4 percent year on year, while rice production is set to go up by 1.0 percent.
According to FAO, world cereal utilization in 2021/22 is expected to expand by 1.7 percent, to a new peak of 2,826 million tonnes.
FAO has forecast total cereal food consumption to rise in tandem with the world population, resulting in a stable annual per capita level of 150 kg.
“As for animal feed use of cereals, similar to 2020/21, a notable feature is an anticipated continued growth in the use of wheat for feed, which is seen to rise to 156 million tonnes, still well below the level of coarse grains, forecast at 895 million tonnes,” it said.
Based on current production and utilization forecasts for 2021/22, world cereal stocks at the close of crop seasons ending in 2022 are anticipated to increase, but by only 0.3 percent, to 811 million tonnes.
“The expected small rise in the level of world cereal inventories, which follows three consecutive seasons of declines, may not be sufficient to prevent a further drop in the stocks-to-use ratio, which is forecast to fall from 28.6 percent in 2020/21 to 28.1 percent in 2021/22.”
While FAO said that its first forecast for world trade in cereals in 2021/22 indicates an increase of only 0.3 percent from the high level estimated for 2020/21, much will depend on the volume of cereals to be imported by China.
Word cereal trade in 2020/21 is seen to expand by as much as 6.3 percent, reaching a peak level of 468 million tonnes.
However, most of this sharp increase reflects surges in imports of cereals by China, which are expected to rise by 30 million tonnes (123 percent) from the previous season, said FAO.
Published in SUNS #9360 dated 7 June 2021
-    Third World Network