FAO, AMIS Report Ongoing Price Increases, Warn of Potential Price Volatility

The FAO Food Price Index continued its 11-month climb in April, rising by 1.7 percent from March 2021. The Index also surged 30.8 percent above its April 2020 levels to reach its highest level seen since May 2014.

The Cereal Price Index rose by 1.2 percent in April after falling slightly in March. Cereal prices are 25.8 percent higher than they were in April 2020. Several factors drove this increase. Maize prices increased by 5.7 percent, stemming from concerns over crop conditions in South America and the U.S., as well as reduced U.S. planting prospects. This increase put maize prices 66.7 percent above their April 2020 values. Wheat prices held steady in April month-to-month due to generally good global production prospects but remained more than 17 percent above their previous year values. Global rice prices, on the other hand, fell for the second month in April due to currency movements and reduced trade.

The Vegetable Oil Price Index rose by 1.8 percent from March. Soy oil prices rose due to strong global demand, particularly for biodiesel, and tightening supplies. Palm and rapeseed oil prices also rose in April due to reduced production in major exporting countries and increased import demand.

The Dairy, Meat, and Sugar Price Indices also all rose in April, by 1.2, 1.7, and 3.9 percent, respectively.

The latest edition of the AMIS Market Monitor also reports steep price increases for most major agricultural commodities, as well as growing food inflation in many countries. While global markets for major crops appear to remain generally stable, concerns over weather conditions, economic conditions, and the ongoing impacts of the COVID-19 pandemic are raising questions regarding how food markets will evolve in the coming months. The report calls for policymakers to prioritize a strong, well-functioning trade environment to prevent excessive price volatility.

Global 2021 wheat production is forecast to reach a record high, thanks to increased output in several countries and a strong rebound in production in the EU. Wheat utilization will also increased due to increased food consumption and industrial use; feed use of wheat is expected to fall below the record level seen last year. Wheat trade forecasts for 2020-2021 fell slightly this month due to anticipated reduced imports from China, Morocco, and Pakistan. Increased imports from Argentina and the EU are expected to keep that decrease small, however. Global wheat ending stocks are expected to rise for the third consecutive season and reach a new record.

Maize production for 2020 was revised upward in April due to revisions in several African countries and in Turkey. Maize utilization forecasts also increased based on increased estimates for feed use in China and the U.S. Global maize trade is expected to increase by 7 percent, with record purchases from China driving the increase. Forecasts for global maize ending stocks fell in April, as increased domestic demand in the U.S. reduced inventories in that country.

Global rice production forecasts for 2020 fell due to reductions in Guinea and the Democratic People’s Republic of Korea. Rice utilization is still expected to reach a record high in 2020-2021, however, despite decreases in food use. Global rice trade prospects remained steady in April and are expected to increase by 6.4 percent from last year. Global rice ending stocks are forecast to increase slightly.

Soybean production forecasts for 2020-2021 rose slightly in April due to increased estimates for Brazil. Overall global soybean output is now expected to rise by 7.5 percent from last year. Soybean utilization forecasts remained steady in April. Trade prospects increased slightly due to higher-than-forecast exports from Brazil and the U.S. Global soybean ending stocks were forecast up in April, but stocks are still expected to fall to a seven-year low in 2020-2021.