Global grain commodity prices stop falling and rebound
Yang Haiquan, reporter based in Geneva
On September 2, the Food and Agriculture Organization of the United Nations (FAO) issued a report stating that, driven by the strong rise in international quotations for sugar, wheat and vegetable oils, global food commodity prices rebounded rapidly in August after falling for two consecutive months.
In August, the FAO Food Price Index averaged 127.4 points, an increase of 3.1% over July and an increase of 32.9% over the same period in 2020.
Affected by concerns about frost damage to Brazil’s crops, the world’s largest sugar exporter, the FAO Sugar Price Index rose 9.6% in August from July, but India and the EU have good production prospects, crude oil prices have fallen, and the Brazilian currency weakened, etc. Factors slowed this upward momentum.
The FAO Vegetable Oil Price Index rose by 6.7% in August, and international palm oil prices rebounded to historical highs due to market concerns that Malaysian palm oil production was lower than potential production, resulting in reduced inventories.
The quotations of rapeseed oil and sunflower oil also rose.
The FAO Grain Price Index in August was 3.4% higher than in July on average.
World wheat prices rose by 8.8% due to lower crop expectations in major exporting countries.
In contrast, corn prices fell by 0.9% due to improved production prospects in Argentina, the European Union and Ukraine, and lower production expectations in Brazil and the United States.
International rice prices continued to fall.
The FAO Meat Price Index rose slightly in August. China’s strong purchases supported mutton and beef prices, while strong import demand in East Asia and the Middle East supported poultry prices.
In contrast, pork prices have fallen due to the continued decline in Chinese purchases and weak domestic demand in Europe.
The FAO Dairy Product Price Index fell slightly from July, due to weak global import demand, seasonal increases in Oceania export supplies, and lower international quotations for milk powder, which offset the increase in butter and cheese prices.
Despite poor production prospects, the world's cereal supply remains abundant.
According to the "Cereal Supply and Demand Briefing" issued by FAO on September 2, global cereal production in 2021 is expected to reach 2.788 billion tons, an increase of 0.7% from the previous year, but lower than the July forecast.
Global wheat production is expected to decrease by 0.7% this year to 769.5 million tons, mainly due to the negative impact of the long-term drought in North America and the unfavorable weather in Kazakhstan and Russia.
In 2021, global coarse grain production is expected to increase by 1.3% to 1.499 billion tons, while Brazil's production is expected to shrink.
Boosted by the record production reported by Vietnam, global rice production is expected to increase by 0.9% year-on-year, reaching a record high of 519 million tons.
It is expected that, supported by the strong growth in feed use and increased food consumption, the global grain utilization rate in 2021/2022 will increase by 1.4% over the previous marketing year, reaching 2.809 billion tons.
Global rice stocks are expected to reach the second-highest level on record, but the drought is expected to squeeze wheat stocks, with stocks in the United States reaching an 8-year low and stocks in Canada falling to the lowest level in 40 years.
Overall, the global grain stock utilization ratio is expected to be 28.1%, lower than the 29.9% in 2021/2022, but from a historical perspective, the supply is still relatively abundant.
It is estimated that the world trade in cereals in 2021/2022 will drop by 1.3% to 466 million tons, and the decline in the trade in wheat and coarse grains will exceed the increase in the trade in rice.
Reporter Yang Haiquan in Geneva