Global food commodity prices rose for the ninth consecutive month in February 2021. This is according to the Food and Agriculture Organization of the United Nations (FAO) reports released on Thursday, March 4, 2021. Quotations for sugar and vegetable oils increased the most.
The FAO Food Price Index averaged 116.0 points in February. This is 2.4 percent higher than the previous month and up 26.5 percent from a year ago. The FAO Food Price Index tracks monthly changes in the international prices of commonly-traded food commodities.
The FAO Sugar Price Index rose by 6.4 percent from January. This is as a result of production declines in key producing countries. Another reason for the increase is the strong import demand from Asia prompting ongoing concerns over tighter global supplies. Expectations of a production recovery in Thailand and a bumper crop in India dampened the increase.
Major Food Categories
The FAO Vegetable Oil Price Index gained 6.2 percent, reaching its highest level since April 2012. Prices for palm, soy, rape, and sunflower seed oils all rose.
The Dairy Price Index rose by 1.7 percent in February 2021. This is led by international export quotations for butter, where firm imports by China met limited supplies from Western Europe. Cheese prices declined, partly due to high inventories in the United States of America.
Also, the FAO Cereal Price Index averaged 1.2 percent higher than in January. Sorghum prices rose 17.4 percent in the month, driven by ongoing strong demand from China. International prices of maize, wheat, and rice were either stable or edged up slightly.
The FAO Meat Price Index increased by 0.6 percent in February. Tight supplies of bovine and ovine meats in key producing regions pushed the prices up. By contrast, pig meat price quotations fell. China’s reduced purchases resulted in the fall. The reduction is due to heavy oversupplies and a rise in unsold pigs in Germany due to the continued ban on exports to Asian markets.
Early estimate points to record 2021 wheat output
FAO also released the Cereals Supply and Demand Brief, including updated assessments of global production, consumption, trade, and inventories.
Global wheat production in 2021 is likely to increase and hit a new record of 780 million tonnes. Expectations of a rebound in production in the European Union more than offset weather-impacted production prospects for output in Russia. Maize production in South Africa is expected to reach near-record levels in 2021. The outputs in South America are forecast at well-above-average levels. The crop is yet to be planted in countries north of the equator.
The world cereal production in 2020 was 2, 761 million tonnes. This is a 1.9 percentage point increase from the previous year. This is as a result of increased yields for maize in West Africa, and rice in India. In addition to bumper wheat harvests in the European Union, Kazakhstan, and the Russian Federation.
FAO’s new projections for 2020/21 include a 2.0 percent annual increase in global cereal utilization to 2, 766 million tonnes. The FAO also projects the world trade in cereals to increase by 5.5 percent to 464 million tonnes. Global cereal stocks are now forecast to end 2021 at 811 million tonnes, 0.9 percent below their opening levels. This will push down the stock-to-use ratio to 28.6 percent. The FAO expects world rice and wheat stocks to increase, while those of coarse grains decline.
Cereal output and import in Low-Income Food Deficit Countries
Crop Prospects and Food Situation estimates that aggregate cereal production by the 51 Low-Income Food Deficit Countries rose to 502.4 million tonnes in 2020. This is a 3.0 percent increase over the previous year.
Also, the FAO expects aggregate cereal import requirements to rise to 74.1 million tonnes in the 2020/21 marketing season. The new forecast shows that the Far East and West Africa sub-regions post the largest additional needs.
Early production outlooks for 2021 are broadly favorable. However, drought-like conditions in Afghanistan and southern Madagascar are of emerging concern.
