Fertilizer Prices Declining But Remain High Globally: FAO Food Price Index and AMIS Market Monitor Released

The FAO Food Price Index declined slightly in August due to falling sugar, meat, and cereal prices. The Index was just over 1 percent lower than its August 2023 value and nearly 25 percent below the peak reached in March 2022.

The Cereal Price Index fell 0.5 percent in August and was 11.9 percent below its previous year’s value. Slow import demand and strong export competition for wheat, as well as higher production in Argentina and the United States, largely drove the decline. Maize and rice prices both increased slightly in August due to concerns over production and currency appreciation against the U.S. dollar.

The Vegetable Oil Price Index rose 0.8 percent in August to reach its highest point since January 2023. Rising palm oil prices drove the increase and stemmed from reduced production in Indonesia. Soybean oil prices fell in August due to good production prospects, and sunflower and rapeseed oil prices also declined due to slowing demand and increasing harvests, respectively.

The Dairy Price Index rose 2.2 percent in August, while the Meat and Sugar Price Indices fell 0.7 and 4.7 percent, respectively.

The latest AMIS Market Monitor highlights the impacts, both positive and negative, of 2024’s excessively high temperatures on agricultural commodity markets. While high temperatures lowered maize production in many major producing areas, the heat helped to increase soybean production in the United States.

Wheat production for 2024 is expected to surpass 2023 levels due to revised production prospects in Argentina, China, and the U.S. Wheat utilization forecasts declined due to revised use in China, while global wheat trade is expected to fall from 2023 levels due to stronger demand from the EU and larger exports from several producing countries. Global wheat ending stock forecasts rose due to revisions in China and larger harvests in the U.S.

Maize production forecasts declined slightly in August, with total production expected to be 1.2 percent below 2023 levels. Utilization is expected to increase by 0.7 percent due to increased global feed use. Maize trade forecasts increased, driven by larger exports from the U.S. and imports by Mexico and Vietnam; however, maize trade is still expected to be almost 5 percent below its 2023-2024 levels. Global maize ending stocks are expected to be 1.5 percent above their opening levels despite reductions in the EU and Ukraine.

Rice production prospects rose in August due to higher expectations in Vietnam and revisions in Bangladesh, while utilization forecasts rose based on higher expected supplies in Asia. Rice trade is still expected to be below 2023 levels due to lower import demand throughout Africa. Global rice ending stock prospects remained largely stable in August.

Soybean production prospects rose due to higher forecasts in Russia and the U.S, while utilization forecasts remained stable due to expected growth in demand. Soybean trade forecasts rose slightly based on increased imports by Argentina and China and higher exports by the U.S. Global soybean ending stocks are expected to reach a record high due to growth in China and the U.S.

Fertilizer prices declined in many markets in August due to seasonal slowdowns, but the report highlights that prices in nearly all regions remain above their 2019 average. Natural gas prices declined in the U.S. but rose in Europe due to impacts from the continued Ukraine-Russia War and Hurricane Beryl. DAP prices increased due to tightening supplies and concerns over future export restrictions. Nitrogen fertilizer prices remained generally stable due to slowing demand; potential Chinese export restrictions in the coming months could lead to increasing prices, however. Potash prices also declined but are expected to increase in the coming months.

Sara Gustafson is a freelance communications consultant.