World food prices surge to a new peak reaching highest level since July 2011
The Food and Agriculture Organization of the United Nations (FAO) recently reported that the world food price barometer surged to a new high, reaching its highest level since July 2011.
The FAO Food Price Index, which tracks monthly changes in a basket of food commodities, averaged 133.2 points in October, up 3% from September and rising for the third month in a row.
The FAO Cereal Price Index increased by 3.2% in October compared to the previous month, with world wheat prices rising by 5% as global availability tightened due to lower harvests in major exporters such as Canada, Russia, and the United States of America. All other major cereals' international prices rose month on month.
In October, the FAO Vegetable Oil Price Index increased 9.6%, reaching an all-time high. Firmer price quotations for palm, soy, sunflower, and rapeseed oils drove the increase. Palm oil prices rose for the fourth month in a row in October, largely due to ongoing concerns about subdued output in Malaysia due to migrant labour shortages.
The FAO Dairy Price Index increased by 2.6 points in September, owing to generally stronger global import demand for butter, skim milk powder, and whole milk powder, as buyers sought supplies to build stocks. Cheese prices, on the other hand, remained largely stable, as supplies from major producing countries were sufficient to meet global import demand.
The FAO Meat Price Index fell 0.7% from its revised value in September, the third monthly decline. International pig and bovine meat quotations fell as a result of reduced purchases from China for the former and a sharp drop in quotations for supplies from Brazil for the latter. Poultry and ovine meat prices, on the other hand, increased as a result of high global demand and limited production expansion prospects.
The FAO Sugar Price Index fell 1.8% from September to October, marking the first monthly decrease after six consecutive monthly increases. The drop was primarily caused by limited global import demand and the prospect of large exportable supplies from India and Thailand, as well as a weakening of the Brazilian Real against the US dollar.
In 2021, cereal output will be at an all-time high, but stocks are expected to fall. Despite expected record global cereal production in 2021, global cereal inventories are expected to contract in 2021/22, according to new forecasts in the FAO's Cereal Supply and Demand Brief, which was also recently released.
The forecast for global cereal output in 2021 is now 2 793 million tonne, a 6.7 million tonne decrease from the previous report in October, owing primarily to lower estimates of wheat production in the Islamic Republic of Iran, Turkey, and the United States of America.
Global coarse grain output, on the other hand, has been revised upward. Maize production was revised upward due to higher-than-expected yields in Brazil and India, as well as improved prospects in several West African countries. Global cereal production is expected to increase over last year and set a new record.
World total cereal utilisation in 2021/22 is expected to increase by 1.7% from the estimated level in 2020/21, led by an expected increase in global food consumption of wheat, which is rising in tandem with global population, while higher feed and industrial uses of maize are also expected to contribute to the expected annual increase.
World cereal stocks are expected to fall 0.8 percent below their opening levels by the end of the season in 2022, to 819 million tonne. As a result, the world cereals stocks-to-use ratio is expected to fall slightly, from 29.4 percent in 2020/21 to 28.5 percent in 2021/22, but remain at a comfortable level.
Following an upward revision this month based on stronger-than-expected global trade in wheat and rice, global trade in cereals is now expected to expand and reach a new record in 2021/22 at 478 million tonne, up 0.3% from the 2020/21 level.