Food, Fertilizer Prices Continue to Rise Amid Trade Uncertainties

Rising vegetable oil, cereal, sugar, and dairy prices drove the FAO Food Price Index up by 1.6 percent in February. However, overall prices remain almost 21 percent lower than the peak seen in March 2022.

The Cereal Price Index rose by 0.7 percent in January. Shrinking exports from Russia and concerns over crop conditions in other producing regions drove wheat prices up. Similar tightening supplies in Brazil and concerns about conditions in Argentina led to increases in maize prices. Rice prices, on the other hand, fell by 6.8 percent due to large quantities of the crop available for exports and weakening demand for imports.

The Vegetable Oil Index rose 2 percent in January to reach nearly 30 percent above its February 2024 level. Palm oil prices increased due to lower production in Southeast Asia and increased demand for biofuel use. Soybean oil prices rose due to increasing global demand from the food sector.

The Dairy and Sugar Price Indices also increased in February, by 4 and 6.6 percent, respectively. The Meat Price Index declined slightly by 0.1 percent.

The latest AMIS Market Monitor reports generally favorable crop conditions for major commodities despite localized weather concerns in some producing regions. The report continues to emphasize the trade-related uncertainty arising from shifting United States policies.

Wheat production forecasts for 2024 remained stable in February, as did utilization forecasts for 2024-2025. Wheat trade forecasts declined slightly due to falling exports from Russia and reduced imports by Turkey. Global wheat ending stock expectations increased due to rising inventories in several countries.

Forecasts for 2024 maize production fell in February, driven by lowered output expectations in Indonesia. Utilization forecasts also declined due to lower demand for feed use. Maize trade forecasts for 2024-2025 increased slightly due to rising exports from Brazil and increased imports by Mexico, South Africa, Turkey, and the Philippines. Global maize ending stock expectations declined slightly.

Rice production forecasts for 2024-2025 increased in February due to higher expected production in India, Cambodia, and Myanmar. Utilization expectations also rose, as did trade as the result of higher expected imports and exports by several countries. Global rice ending stock expectations rose for 2025.

Soybean production forecasts fell due to unfavorable weather conditions in Argentina and Paraguay; however, global production is still expected to reach a record high in 2024-2025. Soybean utilization forecasts fell slightly, while trade forecasts remained stable. Total soybean ending stock forecasts fell due to reduced forecasts for Argentina.

Overall fertilizer prices rose in February due to rising demand. Uncertainties regarding tariffs could lead to continued increases in the coming weeks. Low stocks in Europe and concerns over shifts in trade policies led natural gas prices to be volatile in February.

Ammonia fertilizer prices fell in February due to slowing demand and steady supplies. Nitrogen fertilizer prices rose based on increasing demand and anticipated increased buying from several major importers. Phosphorus fertilizer prices also rose slightly due to declining supplies and anticipated rising demand in the northern hemisphere. Potassium fertilizers remained mainly stable in February, but AMIS expects seasonally rising demand to lead to price increases in the coming weeks.

Sara Gustafson is a freelance communications consultant.