Global Food Prices Soar in March

ROME - Apr 8/22 - SNS -- Global food ingredient prices jumped upward in March, reflecting shocks to global supplies resulting from the impact of war in Ukraine on Black Sea shipping, according to the Food and Agriculture Organization of the United Nations (FAO).

The FAO Food Price Index averaged 159.3 points in March, up 12.6% from February when it had already reached its highest level since its inception in 1990.

Reporting that its Cereal Price Index was 17.1% higher in March, the FAO noted the Russian Federation and Ukraine accounted for around 30% and 20% of global wheat and maize exports, respectively, over the past three years.

World wheat prices soared by 19.7% during the month, exacerbated by concerns over crop conditions in the United States of America. Meanwhile, maize prices posted a 19.1% month-on-month increase, hitting a record high along with those of barley and sorghum. Contrasting trends across the various origins and qualities kept the March value of FAO’s Rice Price Index little changed from February, and thus still 10% below its level of a year earlier.

Interestingly, global pulse markets did not follow the trend in grains and oilseeds, suggesting countries which consume large quantities of Russian origin peas, lentils and chickpeas are well covered over the short term. As a result the STAT global index slipped 0.6% between February and March, though remaining 34.2% above year earlier levels.

The FAO Vegetable Oil Price Index rose 23.2%, driven by higher quotations for sunflower seed oil, of which Ukraine is the world’s leading exporter. Palm, soy and rapeseed oil prices also rose markedly as a result of the higher sunflower seed oil prices and the rising crude oil prices, with soy oil prices further underpinned by concerns over reduced exports by South America.

The FAO Sugar Price Index rose 6.7% from February, reversing recent declines to reach a level more than 20% higher than in March 2021. Higher crude oil prices were a driving factor, along with currency appreciation of the Brazilian Real, while favorable production prospects in India prevented larger monthly price increases.

The FAO Meat Price Index increased by 4.8% in March to reach an all-time high, led by surging pig meat prices related to a shortfall of slaughter pigs in Western Europe. International poultry prices also firmed in step with reduced supplies from leading exporting countries following avian flu outbreaks.

The FAO Dairy Price Index rose 2.6% and was 23.6% higher than in March 2021, as quotations for butter and milk powders rose steeply amid a surge in import demand for near and long-term deliveries, especially from Asian markets.

FAO Sees Bigger Grain Crop

FAO also released its new Cereal Supply and Demand Brief, which includes a forecast for global wheat production in 2022 of 784 million metric tons (MT), a 1.1% increase from 2021. That estimate factors in expectations that at least 20% of Ukraine’s planted area to winter crops, notably winter wheat, may not be harvested due to direct destruction, constrained access or a lack of resources to harvest crops, reports from Russia of continued conducive weather conditions, as well as prospective production trends in China, the European Union, India, North America and elsewhere. Coarse grain production prospects remain favorable in Argentina, Brazil and South Africa.

Wrapping up the 2021 crop year, FAO’s estimate points to a worldwide cereal production of 2 799 million MT, up slightly from 2020, with rice production reaching an all-time high of 520.3 million MT (in milled equivalent).

Global cereal utilization in 2021/22 is projected at 2,789 million MT, including a record level for rice, with increases also expected for maize and wheat.

Global cereal stocks ending in 2022 are forecast to rise by 2.4% from their opening levels, largely due to higher wheat and maize stocks in Russia and Ukraine on account of lower expected exports. The global cereal stocks-to-use ratio is forecast at 29.7% in 2021-22, only marginally below the previous year and “still indicating a relatively comfortable supply level,” according to FAO.

FAO lowered its forecast for world trade in cereals in the current marketing year to 469 million MT, marking a contraction from the 2020-21 level, largely due to the war in Ukraine and based on currently available information. Expectations point to the European Union and India increasing wheat exports, while Argentina, India and the U.S. shipping more maize, partially compensating for the loss of exports from the Black Sea region.

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