In its recent report, the United Nations specialized agency for global initiatives against hunger and malnutrition and food insecurity, the Food and Agriculture Organisation of the United Nations (FAO) has revealed that global food prices reported their fastest monthly growth rate in more than a decade in May, all while the world cereal production is expected to touch a new record high.
The report states that the FAO Food Price Index which tracks monthly changes in the international prices of commonly-traded food commodities averaged 127.1 points in May, 4.8 percent higher than in April and 39.7 percent higher than in May 2020.
The increase in the index is attributed to a surge in the international prices of vegetable oils, sugar and cereals which led the index to its highest value since September 2011 and only 7.6 percent below its all-time peak in nominal terms.
FAO Cereal Price Index
International maize prices, which averaged 89.9 percent above their year-earlier value led the FAO Cereal Price Index to rise 6.0 percent from April. However, maize prices started to retreat at the end of May, mostly on improved production prospects in the United States of America. International wheat prices also showed a late-month drop but averaged 6.8 percent higher in May than in April, while international rice quotations held steady.
FAO Vegetable Oil Price Index
The FAO Vegetable Oil Price Index increased 7.8 percent in May, mainly reflecting rising palm, soy and rapeseed oil quotations. While slow production growth in Southeast Asian countries contributed to the rise of palm oil prices, prospects of robust global demand, especially from the biodiesel sector, drove soy oil prices higher.
The FAO Sugar Price Index grew by 6.8 percent from April, due largely to harvest delays and concerns over lower crop yields in Brazil, the world’s largest sugar exporter, even as large export volumes from India contributed to easing the price surge.
The FAO Meat Price Index rose by 2.2 percent from April, with quotations for all meat types rising due to a faster pace of import purchases by China, as well as rising internal demand for poultry and pig meats in the leading producing regions.
The FAO Dairy Price Index climbed by 1.8 percent in the month, averaging 28 percent higher than its level of one year ago. The increase was led by solid import demand for skim and whole milk powders, while butter prices declined for the first time in almost a year on increased export supplies from New Zealand.
A new Cereal Supply and Demand Brief released recently has offered FAO’s first forecast for world cereal production in 2021, now pegged at nearly 2821 million tonnes, a new record and a 1.9 percent increase from 2020, led by a predicted 3.7 percent annual growth in maize output.
World cereal utilization in 2021/22 is also expected to increase by 1.7 percent to 2826 million tonnes. Total cereal food consumption is projected to grow in tandem with the world population, while increased usage of wheat for animal feed is also anticipated.
Based on those forecasts, world cereal stocks at the close of crop seasons in 2021/22 are expected to grow by 0.3 percent to 811 million tonnes. While the expected modest rise would end three consecutive years of decline, the global stocks-to-use ratio is forecast to decline further to 28.1 percent.
FAO’s first forecast for world trade in cereals in the new season indicates an increase of only 0.3 percent from the high level estimated for 2020/21 when trade is expected to expand by as much as 6.3 percent to a peak level of 468 million tonnes.