Photo Credit: IFPRI/Farha Khan

The latest version of FAO’s Monthly Report on Food Price Trends (FPMA) was recently released. The February report shows global cereal prices have increased overall since the start of 2018.

In January, the benchmark wheat price (U.S. No. 2 Hard Red Winter) rose by 4 percent; at USD 229 per ton, this new price is 14 percent higher than January 2017. A weaker US dollar, combined with concerns over the 2018 US winter crop, supported this rise in prices. However, global wheat supplies remain ample, and strong export competition from the EU and the Black Sea region limited the price increase.

The benchmark US maize (No. 2, Yellow) price also rose in January to USD 156 per ton, putting it 5 percent higher than December 2017 but slightly lower than January 2017 levels. Again, the weakening US dollar contributed to this price increase, as did weather concerns in Argentina; however, strong global supplies helped keep maize prices below their year-earlier level.

Global rice prices, on the other hand, reached a 38-month high in January, hitting 225 points on the FAO All-Rice Price Index. Concerns over dwindling supplies in the Philippines and the US and appreciation of the Thai Baht against the US dollar contributed to this increase, as did ongoing government procurement in India.
Several countries also received domestic price warnings in January: Bangladesh, Ethiopia, Niger, and Nigeria.

In Bangladesh, rice and wheat flour prices both rose above their year-earlier levels in January. Production losses due to flooding led rice prices to rise for the second consecutive month; this reduced rice production also led consumers to buy more wheat flour, thus driving up prices for that commodity as well. In addition, expected lower wheat harvests in March further supported the increase in wheat flour prices, as many farmers switched their plantings in favor of higher-priced rice.

The price of grains in Ethiopia also remained above their year-earlier levels in January. After falling by as much as 45 percent between September and December, maize prices again rose sharply in January. Teff prices followed a similar pattern, while wheat prices remained mostly stable. Overall, grain prices in Ethiopia rose sharply in 2017, driven by poor second harvests, strong exports to Kenya, the devaluation of the local currency, and large institutional purchases. Annual food inflation reached 18 percent in January.

Despite positive harvests and imports in 2017, coarse grain prices in Niger were unseasonable stable or higher in January; they also reached higher than their year-earlier levels. This trend was due to large institutional and commercial purchases, which led many traders to store and withhold large volumes of grain from domestic markets. Ongoing conflict in Nigeria also reduced imports and disrupted regular trade routes, leading to higher consumer prices.

In Nigeria, the price of coarse grains and other staple foods declined in December (the last month for which data are available), but remain relatively high. High prices are especially apparent in the northeastern areas of the country, where conflict continues to hamper market functioning and production activities. The reduced value of the Nigerian Naira relative to the US dollar, combined with high transport costs and strong demand from traders and institutional bodies, also contributed to high food prices in December. Annual food inflation was at 19.4 percent in December.

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