TWN Info Service on UN Sustainable Development (Dec22/01)
8 December 2022
Third World Network

UN: Global food prices remain steady in November, says FAO
Published in SUNS #9705 dated 7 December 2022

Geneva, 6 Dec (Kanaga Raja) — The international prices of a basket of key agricultural food commodities remained virtually unchanged in November, with falling prices of cereals, dairy and meat offsetting increasing quotations for vegetable oils and sugar, the UN Food and Agriculture Organization (FAO) has said.

According to the FAO, its Food Price Index (FFPI) averaged 135.7 points in November 2022, virtually unchanged from October, with the month-on-month decreases in the price indices for cereals, dairy and meat, nearly offsetting increases in those of vegetable oils and sugar.

At this level, the index stood only marginally above (0.3 percent) its corresponding value in November 2021, said FAO.

The FAO Food Price Index is a trade-weighted index that tracks the monthly change in the international prices of a basket of key food commodities.

According to FAO, its Cereal Price Index averaged 150.4 points in November, down 1.9 points (1.3 percent) from October, but still 9.0 points (6.3 percent) above its value a year ago.

It said that world wheat prices registered a 2.8-percent decline during the month of November, mostly driven by the rejoining of the Russian Federation in the Black Sea Grain Initiative and the extension of the agreement, subdued import demand for supplies from the United States of America due to uncompetitive prices, and greater competition in global markets with increased shipments from the Russian Federation.

International prices of coarse grains also eased in November, down 1.0 percent from October, it said, adding that maize prices declined by 1.7 percent month-on-month, also influenced by developments in the Black Sea Grain Initiative, while improved transport on the Mississippi River in the United States of America weighed on prices as well.

“International prices of sorghum declined by 1.2 percent in November in tandem with maize prices, while those of barley increased by 2.5 percent.”

According to FAO, international rice prices moved up by another 2.3 percent in November, influenced by currency appreciations against the United States dollar for some Asian suppliers and good buying interest.

The FAO Vegetable Oil Price Index averaged 154.7 points in November, up 3.4 points (2.3 percent) after declining for seven consecutive months, it said.

“The increase was driven by higher international palm and soy oil prices, more than offsetting lower rapeseed and sunflower oil quotations.”

FAO said international palm oil prices rebounded in November, supported by renewed global import demand owing to competitive prices relative to those of other edible oils, as well as concerns over lower production potentials due to excessive rainfall in parts of major growing regions in Southeast Asia.

Meanwhile, world soy oil values rose slightly, chiefly underpinned by persistent, robust demand from the bio-diesel sector, particularly in the United States of America, it added.

On the other hand, international rapeseed and sunflower oil prices dropped in November, weighed by, respectively, expected ample global supplies and the extension of the Black Sea Grain Initiative, said FAO.

According to FAO, its Dairy Price Index averaged 137.5 points in November, down 1.7 points (1.2 percent) from October, marking the fifth consecutive monthly decline, but remained 11.6 points (9.2 percent) above its value a year ago.

“In November, international price quotations for skim milk powders fell the most, reflecting lower import demand, as buyers were well covered for their near-term needs coupled with increased export availabilities in Europe.”

FAO said whole milk powder prices dropped substantially, principally due to lower buying interest from China, only partially compensated by higher purchases by Southeast Asian countries.

Meanwhile, it said, world butter prices declined on weak import demand, impacted by high retail prices and market uncertainties about consumer purchases in the months ahead.

On the other hand, international cheese prices increased, underpinned by a steady import demand and less buoyant export availabilities from leading producing countries in Western Europe, it added.

According to FAO, its Meat Price Index averaged 117.1 points in November, down 1.1 points (0.9 percent) from October, also marking the fifth consecutive monthly decline, but remained 4.6 points (4.1 percent) above its value a year ago.

In November, international bovine meat prices fell for the fifth month in a row, as increased export supplies from Australia added to already high supplies from Brazil, notwithstanding China’s continuing strong import demand, it said.

In contrast, world prices of all other meat types rebounded, with the price of ovine (lamb and mutton) meat rising the most, driven by solid import demand, despite seasonally rising supplies from Oceania, said FAO.

International poultry meat prices also recovered, reflecting tighter global export supplies amid production setbacks in many large producing countries due to intensified avian influenza outbreaks, it added.

“Meanwhile, pig meat prices rose on a surge in demand ahead of the upcoming holiday period and the impact of currency movements.”

According to FAO, it Sugar Price Index averaged 114.3 points in November, up 5.7 points (5.2 percent) from October, marking the first increase after six consecutive monthly declines.

“The November rebound was mostly related to strong buying amid prevailing tight global sugar supplies due to harvest delays in key producing countries and the announcement by India of a lower sugar export quota,” it said.

Higher ethanol prices in Brazil, raising concerns over a greater use of sugarcane to produce ethanol, exerted further upward pressure on world sugar prices, it added.

Despite the November increase, international sugar price quotations remained 5.9 points (4.9 percent) below their levels in the same month of last year, weighed down by prospects of ample global supplies in the 2022/23 season, said FAO.

GLOBAL CEREAL PRODUCTION FORECAST TO FALL

Meanwhile, in a separate Cereal Supply and Demand Brief, FAO said that its forecast for world cereal production in 2022 has been cut by 7.2 million tonnes this month and is now pegged at 2,756 million tonnes, 2.0 percent (57 million tonnes) lower year-on-year.

By comparison, world cereal production grew by an average of 56 million tonnes per year in the last three years, it added.

This month’s downgrade mainly concerns maize and, albeit by a smaller amount, wheat production, said FAO.

Global coarse grain production in 2022 is pegged at 1,462 million tonnes following an almost 5-million-tonne cut to the forecast and is now seen to decline by 3.1 percent compared to the 2021 out-turn, it added.

FAO said the recent reduction principally reflects lower maize harvest prospects in Ukraine, where the impact of the war has made post-harvesting operations prohibitively expensive, compelling many farmers to leave planted areas unharvested.

“Latest official data also confirm a smaller-than-previously-predicted crop in Serbia, where drought has sharply curtailed yields. Conversely, small upward revisions are made to production estimates in Turkiye and Paraguay.”

FAO said its forecast for global wheat production in 2022 has been lowered by 2.7 million tonnes this month down to 781.2 million tonnes. Nevertheless, it remains a record high.

“The month-on-month cut-back almost entirely concerns Argentina, where prolonged dry weather conditions are impairing yields, which have dragged down production prospects.”

Partly offsetting this decline, production estimates are raised for the United Kingdom of Great Britain and Northern Ireland and Kazakhstan, resting on higher-than-expected yields, said FAO.

FAO has forecast global rice production in 2022 to fall 2.4 percent below the 2021 all-time record to an overall volume of 512.8 million tonnes (milled basis).

FAO said that this level is slightly higher than the November expectations, largely due to a better-than-earlier- anticipated outcome in Madagascar and historical output revisions, namely for the Democratic Republic of the Congo, Malaysia and Venezuela.

Noting that planting of the 2023 winter wheat crop is ongoing in the northern hemisphere countries, FAO said that concerns over the affordability of inputs have raised uncertainty over the global planting expectations, although the elevated crop prices could help to maintain an above-average area.

In the United States of America, winter wheat plantings proceeded at a quick pace and were almost complete as of mid-November, it added.

“Drought is currently affecting about three-quarters of the winter wheat area and the drier conditions are forecast to persist in the southern Great Plains until early next year, although some improvements are expected elsewhere.”

In the European Union, winter wheat sowings are ongoing under broadly conducive weather conditions, supporting crop emergence, said FAO.

However, it said increased precipitation is needed in some areas that experienced rainfall deficits earlier in the year, including parts of northern Italy.

In Ukraine, a 40-percent decrease in wheat plantings from the five-year average is forecast, as the war continues to constrain access to fields and cause severe input shortages, it added.

FAO said in the Russian Federation, abundant rains that hindered land preparation and relatively lower domestic prices are expected to cause an area contraction, with winter wheat plantings forecast to decline from last year to a near-average level.

“In Asia, high domestic prices are seen supporting above-average wheat plantings in China (mainland) as well as in India, where the government raised the minimum support price of wheat.”

The effects of extensive flooding in Pakistan between June and August could result in a decrease in the wheat area, with plantings normally completed by December, said FAO.

The 2023 coarse grain crops are being sown in the southern hemisphere countries, it noted, adding that in Brazil, official forecasts point to a record-high maize area, underpinned by remunerative domestic prices and generally beneficial weather at the start of the season.

“In South Africa, provisional planting intentions point to a likely moderate decline in the maize acreage from last year, but are expected to remain at an above-average level. Weather conditions in South Africa and neighbouring countries have so far been favourable, supporting early crop development,” said FAO.

World cereal utilization in 2022/23 is forecast at 2,777 million tonnes, nearly unchanged from the previous month and pointing to a 0.7 percent (21 million tonnes) decline from 2021/22, it added.

It said that the forecast for total utilization of coarse grains in 2022/23 has been lowered marginally (1.2 million tonnes) from the previous forecast in November to 1,484 million tonnes, marking a likely 1.3 percent fall from the previous season.

“The foreseen decline is driven mostly by an expected contraction in the feed use especially of maize, but also of barley and sorghum, as well as industrial use of maize.”

FAO said that its forecast for global wheat utilization in 2022/23 is unchanged from last month at 775 million tonnes, suggesting a fractional increase (0.2 percent) from the 2021/22 level, with a rise in the use of wheat for food predicted to counter an expected fall in feed use and, to a much lesser extent, in other uses.

“World rice utilization in 2022/23 is now forecast at 519.0 million tonnes, some 600,000 tonnes more than in November but still down 0.6 percent from the 2021/22 historical peak,” it added.

The forecast for world cereal stocks by the close of seasons in 2023 has been scaled down by 1.1 million tonnes since the previous month to 839 million tonnes, representing a 2.2 percent (18.5 million tonnes) decline from the previous season and the lowest level in three years, said FAO.

Total coarse grain inventories are seen lower-than-earlier-anticipated by 2.1 million tonnes, primarily stemming from downward revisions made for maize inventories in Ukraine on account of a lower production estimate, FAO added.

This month’s revision brings the forecast for total coarse grain inventories down to 345 million tonnes, representing a 6.1 percent fall below opening levels, largely attributed to a 6.8 percent forecast fall in the global stocks of maize.

FAO said that the forecast for world wheat inventories remains near the previous month’s forecast of 300 million tonnes, representing a 2.4 percent rise above opening levels.

It said the bulk of the increase is anticipated to be concentrated in China (mainland) and the Russian Federation, outweighing anticipated draw-downs in several other countries, in particular India, the European Union, Ukraine and the United States of America.

Following a 500,000-tonne aggregate upward revision to forecasts of reserves held by rice importers, FAO said it now anticipates world rice stocks at the close of the 2022/23 marketing years at 194.0 million tonnes, down 1.6 percent from the 2021/22 peak, but still the second highest level on record.

FAO has forecast world trade in cereals in 2022/23 at 472 million tonnes, up 2.7 million tonnes from last month but still pointing to a likely 1.9-percent (9.2 million tonnes) contraction from the 2021/22 record level.

Despite a 2.3-million-tonne upward revision this month, world trade in coarse grains in 2022/23 (July/June) is still forecast to decline by 2.6 percent from the 2021/22 level, down to 225 million tonnes, it said.

FAO said that this month’s increase is the result of a 2.1-million-tonne upward adjustment to global maize trade, primarily reflecting a continued strong export pace from Brazil and the higher import demand anticipated for the European Union to compensate for reduced domestic production.

Forecast at 194 million tonnes, world trade in wheat in 2022/23 (July/June) is predicted to fall by 0.8 percent from the 2021/22 level, said FAO.

“While the latest global forecast is close to last month’s, revisions have been made to the export forecasts of some countries,” it added.

Expected shipments from Australia and the Russian Federation have been revised upwards mostly on account of good supplies and high import demand, while downward adjustments have been made for exports from Argentina, following a reduction to the domestic production estimate, and the European Union, based on higher competition, it said.

FAO said its forecast for international trade in rice in 2023 (January-December) remains pegged at 52.9 million tonnes, down from a revised level of 54.5 million tonnes for 2022, with the forecast 2.9 percent annual reduction largely reflecting predicted reduced shipments by India, as well as by Brazil, Pakistan, Uruguay and the United States of America. +