Global food prices index up 10th consecutive month
Global food commodity prices rose in march to record a tenth consecutive monthly spike, with quotations for vegetable oils and dairy products occupying top spot, the Food and Agriculture Organization of the United Nations (FAO) stated in its latest global food index report.
FAO food price index, which monitors monthly changes in international prices of commonly-traded food commodities, averaged 118.5 points in March, 2.1 percent higher than its February record, reaching its highest level since June 2014.
FAO Vegetable Oil Price Index, which climbed 8.0 per cent from the previous month to hit nearly 10-year high, recorded the highest March increase, closely followed by soy oil prices which rose sharply due in part to the prospects of firm demand from the biodiesel sector.
FAO’s dairy price index for March witnessed a 3.9 percent surge compared to February, with butter prices underpinned by tight supplies in Europe associated with increased demand in anticipation of a food-service sector recovery.
Milk powder prices also jumped, supported by a surge in imports in Asia, particularly China, due to declining production in Oceania and scarce shipping container availability in Europe and North America. Meat price index also rose by 2.3 per cent from February, with imports by China and a surge in internal sales in Europe.
Cereal and sugar prices plunge
On the other hand, the price index dropped 1.8 but still registered a 26.5 per cent rise compared to March 2020. Wheat export prices also declined, buoyed by generally good supplies and favourable production prospects for 2021 crops. Maize and rice prices were other cereals that recorded price decreases.
Sugar price Index averaged 96.2 points in March, down 4.0 percent monthon-month, its first decline of the year after sharp increases witnessed in January and February supported by prospects of large exports from India, but it remained more than 30 percent above March 2020 level.
Cereal crop forecast for the rest of 2021
FAO predicts world cereal production in 2021 to increase for the third consecutive year based on expectations of better crop conditions in several countries. Global wheat production is also expected to reach a new high of 785 million tonnes in 2021, up 1.4 percent from 2020, strengthened by a likely sharp rebound across most of Europe and expectations of a record harvest in India.
Above-average outputs are also expected for maize, with a record harvest anticipated in Brazil and a multiyear high in South Africa, FAO stated.
For the current 2020/21 marketing season, global cereal utilization is expected to reach 2777 million tonnes, 2.4 percent higher than the previous year, driven largely by higher estimates of feed use of wheat and barley in China, where the livestock sector is recovering from African swine fever.
World cereal stocks at the end of 2021 are forecast to fall by 1.7 percent from their opening levels to 808 million tonnes. Combined with the utilization forecasts, the global cereal stock-to-use ratio for 2020/21 is foreseen to dip to a seven-year low of 28.4 percent.
FAO also raised its forecast for world trade in cereals during 2020/21 to 466 million tonnes, a 5.8 percent increase from the previous year, driven by faster trade in coarse grains linked to unprecedented levels of maize purchases by top consumer, China while the international rice trade is also expected to expand by six percent yearon-year.