Vegetable oil hits all-time high as global food prices rebound in Jan.
QUOTATIONS FOR GLOBAL FOOD COMMODITIES WITNESSED a rebound in January, a sharp contrast to the decline posted in December 2021, according to the latest food price index report of the United Nations Food and Agriculture Organisation (FAO).
The FAO food price index, which tracks monthly changes in the international prices of commonly-traded food commodities, averaged 135.7 points in January, 1.1 percent higher than in December 2021.
Details highlighted in the report emphasised that the rebound was led by the vegetable oil index, which averaged 185.9 points, up 4.2 percent month-on-month to mark an all-time high.
Palm oil prices also followed a similar upward trend, underpinned by concerns over a possible reduction in export availability from Indonesia, the world’s lead- ing exporter.
Soy oil traded higher, supported by strong import purchases, particularly from India, while rapeseed and sunflower seed oil prices also rose, amid lingering supply tightness and surging global import demand.
Commenting on the surge in vegetable oil price, Boubaker BenBelhassen, director of FAO’s markets and trade division, stated that reduced export availability, as well as other supply-side constraints, especially labour shortages and unfavourable weather, pushed vegetable oil prices up to an alltime high.
Ben-Belhassen also remarked that there is a concern that the impacts of the constraints will not ease anytime soon, raising fears of increasing quotations.
In the report, the FAO dairy price index rose by 2.4 percent, its fifth consecutive monthly rise, with sharp increases registered for skim milk powder and butter.
The global food organisation attributed reduced export availability from Western Europe and below-average expectations for milk production in Oceania for the tightening in global dairy markets. Processing and transportation delays linked to COVID-19-related labour shortages were also highlighted as factors for the rise in the dairy price index.
The FAO Cereal Price index for January increased marginally by 0.1 percent month-on-month as maize export prices increased 3.8 percent, spurred by concerns over persistent drought conditions in South America.
In contrast, world wheat prices declined by 3.1 percent on the back of large harvests in Australia and Argentina, while lower harvests and steady purchases by Asian buyers led to a 3.1 percent month-on-month increase in international rice prices.
The FAO report further showed that the meat price index rose in January, with world bovine meat prices reaching a new peak as global import demand exceeded export supplies. However, ovine and poultry meat prices eased as global exportable supplies outstripped import demand, despite tight supplies arising from COVID-19 related production and transportation delays, and avian flu outbreaks recorded in some poultry meat producing countries. Meanwhile, pig prices rose amid reports of labour shortages and high input costs.
The FAO sugar price index emerged the only subindex to post a decline in January, as it tumbled 3.1 percent from the previous month due to favourable production prospects in major exporters India and Thailand, as well as improved rains and lower ethanol prices in Brazil.
FAO cereal production outlook for 2022
FAO’s latest forecast for world trade in cereals in 2021/22 stands at a record level of 481 million tonnes, up 0.4 percent from the previous marketing year. The report also reflected expectations of a 2.0 percent increase in global wheat trade and an almost 4.0 increase in the volume of globally traded rice, more than offsetting a 1.5 percent contraction anticipated for coarse grains.
For 2022, global wheat plantings are expected to expand, supported by mostly conducive weather conditions in the northern hemisphere, although high input costs could dampen expectations of a larger expansion.
The outlook for maize is projected to be robust, with high prices pointing to record plantings in Argentina and Brazil.
Worldwide cereal utilisation in 2021/22 is forecast to increase by 1.6 percent year-on-year, indicating a likely decline in the world cereal stocks-to-use ratio to 28.7 percent, slightly lower than the previous year’s but still a historically comfortable level.