The FAO food price index, which monitors monthly changes in the international prices of a basket of commonly-traded food commodities, plunged for the sixth month in a row in September, with sharp drops in the prices for vegetable oils offsetting higher cereal prices, according to the latest report by the Food and Agriculture Organisation of the United Nations (FAO).
Prices of the selected food commodities averaged 136.3 points in September, down 1.1 percent against 138.0 points in August, but stood 5.5 percent above its value in the corresponding period of 2021.
The FAO Vegetable Oil Price Index led the decline, falling 6.6 percent over the month to reach its lowest level since February 2021. International quotations for palm, soy, sunflower and rapeseed oils were also lower.
Global cereal output, utilisation and trade to decline in 2022/23 season
The FAO in its latest cereal supply and demand brief projected a reduction in global cereal production for 2022 which it pegged at 2.768 million tonnes, 1.7 percent below the 2021 outturn.
Also, world coarse grain output is forecast at 1 468 million tonnes, down 2.8 percent year-on-year, due largely to adverse crop conditions in the U.S. World rice production is forecast at 512.8 million tonnes, down 2.4 percent from its all-time high reached in 2021, but still an above-average crop.
According to the report, lingering heavy inventories of palm oil, coinciding with seasonally rising production in Southeast Asia, pushed palm oil prices down. Meanwhile, higher soy oil export availabilities in Argentina, increased sunflower oil supplies from the Black Sea region and lower crude oil prices also contributed to the drop in this subindex.
By contrast, the FAO Cereal Price Index was up 1.5 percent from August. International wheat prices rebounded by 2.2 percent, linked to concerns regarding dry crop conditions in Argentina and the U.S., a fast pace of exports from the European Union amid high internal demand and heightened uncertainty about the Black Sea Grain Initiative’s continuation beyond November.
Meanwhile, world maize prices were mostly stable, as a strong U.S. dollar countered pressure from a tighter supply outlook linked to downgraded production prospects in the U.S. and the European Union. The FAO All-Rice Price Index climbed 2.2 percent, largely in response to export policy changes in India, the report stated.
The FAO dairy price index was down 0.6 percent in the month, to a great extent reflecting the impact of the weaker euro versus the U.S. dollar, exacerbated by market uncertainties and bleak global economic growth prospects.
On a similar trend, the FAO Meat Price Index shed 0.5 percent. World bovine meat prices fell on high export availabilities from Brazil and elevated cattle-liquidation in some producing countries, while poultry meat prices declined due to subdued import demand. On the other hand, world pig meat prices rose due to a supply shortfall of ready-to-slaughter animals in the European Union.
The FAO Sugar Price Index shed 0.7 percent during the month of September, mostly attributed to good production prospects in Brazil along with lower ethanol prices and currency movement effects.
FAO raised its global wheat production forecast to 787.2 million tonnes in September, up 1.0 percent from the previous year and on track to mark a record high, due to better-than-expected yields in the European Union and the Russian Federation.
However, world cereal utilization over 2022/23 is projected to decline by 0.5 percent from the previous season to 2 784 million tonnes, with the reduction mostly reflecting reduced feed use.
World cereal stocks at the close of the 2023 seasons are forecast to contract by 1.6 percent below their opening levels, down to 848 million tonnes. The world cereals stocks-to-use ratio is also expected to drop to 29.7 percent in 2022/23 from 31 percent in the previous year, still relatively high from a historical perspective.
World trade in cereals is predicted to fall by 2.4 percent in 2022/23 (July/June) from the preceding marketing season, with foreseen contractions in trade of all major cereals. The decline is attributed to the war in Ukraine and the strength of the U.S. dollar.
The report also forecasts that cereal production in Low-Income Food-Deficit Countries (LIFDCs) in 2022 will decline by 0.4 percent from 2021.