Rome – The benchmark indicator of world food prices rose in February, reaching an all-time high, driven by vegetable oils and dairy products, the Food and Agriculture Organization of the United Nations (FAO) reported today. ).
The FAO Food Price Index stood at an average of 140.7 points in February, that is, 3.9% more than in January, 24.1% more than a year ago and 3.1 points above the level reached in February 2011. The index reflects the monthly variation in international prices of the most traded food products.
The FAO Vegetable Oil Price Index led the increase, rising 8.5% from the previous month and thus reaching a new record, mainly driven by higher quotations for palm oil, soybean oil and soybean oil. sunflower. The sharp increase in the vegetable oil price index was mainly due to sustained global import demand, which coincided with some supply-side factors, notably reduced palm oil export availabilities in Indonesia, the world’s largest exporter, lower soybean production prospects in South America and concerns about reduced sunflower oil exports due to disturbances in the Black Sea region.
The FAO Dairy Price Index in February was 6.4% on average above the level reached in January, driven by lower-than-expected milk supplies in Western Europe and Oceania, as well as weaker demand. of persistent imports, especially from North Asia and the Middle East.
The FAO Cereal Price Index increased by 3.0% from the previous month, due to higher coarse grain quotations, as international maize prices increased by 5.1% as a result of a combination of continued concerns about the crop situation in South America, uncertainty regarding Ukraine’s maize exports and rising wheat export prices. World wheat prices increased by 2.1%, mainly due to uncertainty about total supply flows from Black Sea ports. International rice prices increased by 1.1%,
The FAO Meat Price Index increased by 1.1% from January, as international beef quotations hit a new record against the backdrop of strong global import demand and limited supplies of ready-to-eat cattle. slaughter in Brazil, as well as a high demand for cattle herd rebuilding in Australia. Although pigmeat prices increased, sheepmeat and poultry prices fell, partly reflecting, respectively, large exportable supplies in Oceania and a reduction in imports from China after the end of the Festival. of spring.
The FAO Sugar Price Index fell by 1.9% on the back of favorable production prospects in major exporting countries such as India and Thailand, and improved growing conditions in Brazil.
“Concerns about the conditions of the crops and the adequacy of exportable supplies explain only in part the current increases in world food prices. Food price inflation is to a much greater extent caused by sectors other than food production, especially energy, fertilizer and feed,” said Mr Upali Galketi Aratchilage, FAO Economist . “All of these factors tend to reduce the profit margins of food producers, discouraging them from investing and expanding production.”
The FAO Food Price Index measures average prices throughout the month, so the February figure only partially incorporates the effects of the conflict in Ukraine on markets.
World production of wheat and maize is estimated to increase in 2022
FAO also released its latest cereal supply and demand briefing note , which contains a preliminary forecast of world cereal production in 2022. World wheat production is forecast to rise to 790 million tonnes, with high anticipated yields and extensive planting in North America and Asia, which would offset a likely smaller decline in the European Union and the negative impact on crops of drought in some North African countries.
The maize harvest will start soon in the southern hemisphere, with production expected to reach a record level in Brazil and above average levels in Argentina and South Africa.
The FAO has also updated its forecast for world cereal production in 2021, which now stands at 2,796 million tonnes, that is, 0.7% more than the previous year.
Currently, world cereal utilization in 2021/22 is forecast to reach 2 802 million tonnes, or 1.5 percent more than in 2020/21. Likewise, world cereal reserves are forecast to increase slightly throughout the year to reach 836 million tonnes by the end of 2022. Based on these estimates, the world cereal reserves-to-use ratio would stand at 29.1%, “which would be the lowest value in eight years, but would still indicate a comfortable supply level,” according to the FAO.
The FAO also raised its forecast for global cereal trade to 484 million tonnes, 0.9% above the level recorded in 2020/21. This forecast does not take into account the possible repercussions of the conflict in Ukraine. FAO is closely monitoring developments and will assess these implications in due course.
Cereal production shortfall in vulnerable countries
Cereal production in the world’s 47 low-income food-deficit countries ( LIFDCs ) is forecast to fall by 5.2 percent in MY 2021/22 compared to 2020/21 due to conflicts and extreme weather events, according to the latest “ Crop Prospects and Food Situation ” report, also released today by the Global Information and Early Warning System on Food and Agriculture ( GIEWS ). This points to an 8 percent increase in the aggregate import needs of the LIFDCs, to 66.6 million tonnes.
The quarterly report includes updated information on the situation in the 44 countries currently in need of external food assistance, as well as more detailed updates on regional cereal production trends around the world, while also pointing to risks to production and exports, as well as livelihoods, derived from the escalation of the conflict in Ukraine.
Source: Food and Agriculture Organization of the United Nations