Food Prices Index falls for fourth consecutive month

Food Prices Index falls for fourth consecutive month

fell for the fourth consecutive month in May, the Food and Agriculture Organization (FAO), of the United Nations, reported on Thursday.

The report, published on the FAO webpage, shows details of the Food, Price Index, which tracks international prices of the most commonly-traded food commodities.

It said while supplies appear strong, demand weakened due economic contractions triggered by the COVID-19 pandemic.


The report revealed that FAO Dairy Price Index declined 7.3 per cent from April, led by steep drops in the quotations for butter and cheese due to seasonal supply factors and lower import demand, and averaged 19.6 per cent below its level one year ago.

Quotations for milk powders declined only moderately, as low prices and renewed economic activity in China fuelled strong buying interests.

“The FAO Sugar Price Index bucked the trend, rising 7.4 per cent from the previous month and undoing half of its April decline due to a rebound in international crude oil prices as well as lower-than-expected harvests in India and Thailand, respectively the world’s second-largest sugar producer and second-largest exporter,” it said.

The FAO Cereal Price Index declined 1.0 per cent from April. International rice prices edged up slightly, buoyed by rising Japonica and Basmati quotations, while wheat export prices fell, amid expectations of ample global supplies. Coarse grain prices fell further, with U.S. maize prices now almost 16 per cent below their level of May 2019.

The FAO Vegetable Oil Price Index fell 2.8 per cent to a 10-month low.

While quotations for rapeseed and sunflower oil prices increased, those for palm oil fell for the fourth consecutive month, reflecting subdued global import demand and higher-than-expected production and inventory levels in major exporting countries.

“The FAO Meat Price Index declined by 0.8 per cent in May, averaging 3.6 per cent below its May 2019 value. Bovine meat quotations increased while those for poultry and pig meats continued to fall, reflecting high export availabilities in major producing countries, despite an increase in import demand in East Asia following the relaxation of COVID-19 social distancing measures,” it said.


“FAO’s first forecasts for the 2020/21 season, based on conditions of crops already in the ground, planting expectations for those still to be sown and assuming normal weather for the remainder of the season, point to a comfortable global supply-demand situation for cereals,” it said.

In North America and Ukraine and near-record harvests in South America, maize accounts for 90 per cent of the predicted output increase of all cereals, with an expected expansion of 64.5 million tonnes, to a total of 1 207 million tonnes.

Also, rice production is seen reaching an all-time high of 508.7 million tonnes, up 1.6 per cent from 2019, boosted by expected recoveries in China, Southeast Asia and South Asia as well as the United States of America.

In the report, wheat output, by contrast, is forecast to decline from the solid level of 2019, as likely drops in the European Union, Ukraine and the U.S. more than offset expected increases in Australia and the Russian Federation.

It revealed that world cereal utilisation in the year ahead is also forecast to reach an all-time high, rising 1.6 per cent to 2 732 million tonnes, as feed, food and industrial uses are all expected to expand.

The report said maize is the primary driver, as its use for livestock feeding in China and for ethanol production in the U.S. are both foreseen increasing.

It forecasted that rice utilization in 2020/21 will expand by 1.6 per cent, underpinned by ample supplies, with global per capita food intake rising 0.6 per cent in the year to 53.9 kilogrammes.

“Reflecting the new production and consumption forecasts, FAO now expects world cereal inventories by the end of national marketing seasons in 2021 to reach a new record of 927 million tonnes, a 4.5 per cent increase from their already high opening levels,” it said

“That would drive the global cereal stock-to-use ratio to 32.9 per cent, a comfortably higher level than the 21.2 per cent low registered in 2007/08. China is expected to hold 47 per cent of global cereal stocks,” it said

According to the report, FAO expects world cereal trade in 2020/21 to rise by 2.2 per cent to 433 million tonnes, setting a new record, with expansions expected for all major cereals, led by a 6.2 per cent anticipated increase in the global trade in rice.