World Food Price Barometer Surges to New Peak, Highest Level Since July 2011

Oluchi Chibuzor

The world food price barometer has surged to a new peak reaching its highest level since July 2011.
This is coming as global cereal production is poised to hit an all-time high with stocks set to decline.

The Food and Agriculture Organization of the United Nations (FAO), stated this in it’s Food Price Index report which was released recently.
The FAO Food Price Index, which tracks monthly changes in the international prices of a basket of food commodities, averaged 133.2 points in October, up three per cent or three point nine points from September, rising for a third consecutive month.

According to the report, the FAO Vegetable Oil Price Index went up nine point 6 per cent in October, hitting an all-time high as the increase was driven by firmer price quotations for palm, soy, sunflower and rapeseed oils.
“Palm oil prices rose for a fourth consecutive month in October, largely underpinned by persisting concerns over subdued output in Malaysia due to ongoing migrant labour shortages, “FAO said.

Similarly the FAO Dairy Price Index rose by two point six points from September, influenced by generally firmer global import demand for butter, skim milk powder and whole milk powder amid buyers’ efforts to secure supplies to build stocks.

By contrast, FAO reported that cheese prices remained largely stable, as supplies from major producing countries were adequate to meet global import demand.
The reports added that, “The FAO Meat Price Index slipped zero point seven percent from its revised value in September, marking the third monthly decline. International quotations for pig and bovine meats fell amid reduced purchases from China of the former and a sharp decline in quotations for supplies from Brazil of the latter. By contrast, poultry and ovine meat prices rose, boosted by high global demand and low production expansion prospects.

“The FAO Sugar Price Index dropped by one point eight percent from September, marking the first decline after six consecutive monthly increases. The decline was mainly the result of limited global import demand and prospects of large exportable supplies from India and Thailand as well as a weakening of the Brazilian Real against the US production.”

However, despite an expected record world cereal production in 2021, global cereal inventories are seen heading for a contraction in 2021/22, according to new forecasts in FAO’s Cereal Supply and Demand Brief.

The forecast for world cereal output in 2021 is now pegged at 2 793 million tonnes, down by 6.7 million tonnes since the previous report in October, largely due to cuts to the estimates of wheat production in the Islamic Republic of Iran, Turkey and the United States of America.

The report added, “By contrast, global coarse grains output has been revised upwards. An upward revision to maize production was driven by better-than-previously expected yields in Brazil and India and improved prospects in several West African countries.

“Forecast at 2 812 million tonnes, world total cereal utilization in 2021/22 is heading for a one point seven percent gain from the 2020/21 estimated level, led by an anticipated increase in global food consumption of wheat, rising in tandem with world population, while foreseen higher feed and industrial uses of maize should also contribute to the expected annual increase.”

Furthermore, World cereal stocks by the close of seasons in 2022 are forecast to fall zero point eight per cent below their opening levels, to 819 million tonnes.
Consequently, the world cereals stocks-to-use ratio is forecast to decline slightly, from 29.4 percent in 2020/21 to 28.5 percent in 2021/22, but still indicating an overall comfortable level.
“Following an upward revision this month on stronger-than-earlier-anticipated global trade in wheat and rice, world trade in cereals is now forecast to expand and reach a new record in 2021/22 at 478 million tonnes, up 0.3 percent from the 2020/21 level, “FAO added.