TWN Info Service on Sustainable Agriculture
10 November 2022
Third World Network

UN: Global food prices remain broadly stable in October, says FAO
Published in SUNS #9686 dated 10 November 2022

Geneva, 9 Nov (Kanaga Raja) — The international prices of a basket of key agricultural food commodities were virtually unchanged in October, with rising cereal prices countering falls in the prices of other staples, the UN Food and Agriculture Organization (FAO) has said.

According to FAO, its Food Price Index (FFPI) averaged 135.9 points in October 2022, virtually unchanged from September, with the price indices of all the covered commodity groups, except cereals, down month-on-month.

An upturn in the Cereal Price Index countered drops in the indices for vegetable oils, dairy, meat and sugar, it said.

FAO said that with the latest updates, the FFPI has dropped 23.8 points (14.9 percent) from its peak in March this year, but remained 2.7 points (2.0 percent) above its value in the corresponding month last year.

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.

FAO said that its Cereal Price Index averaged 152.3 points in October, up 4.4 points (3.0 percent) from September and 15.2 points (11.1 percent) above its value a year ago, adding that international reference prices of all the major cereals were up month-on-month.

FAO said that world wheat prices rose by 3.2 percent, mostly reflecting continued uncertainties related to the Black Sea Grain Initiative.

“Tighter supplies in the United States of America, following a downward production revision, also contributed to the firmer tone in markets,” it added.

International prices of coarse grains increased by 3.5 percent month-on-month, led by a 4.3-percent rise in world maize prices, said FAO.

FAO said the maize price increase was underpinned by lower production prospects in the United States of America and the European Union, along with dry planting conditions in Argentina and uncertainty about the continuation of Ukraine’s exports.

“International sorghum prices also increased by 3.0 percent in October, influenced by the strength in maize prices.”

Meanwhile, world barley prices increased only marginally (0.3 percent), with higher global supplies stemming from better production prospects in the European Union helping to cap price gains, said FAO.

International rice prices remained on an uptrend in October, as the bulk of new crop arrivals were still forthcoming in Asia, although low demand limited the monthly price increase to 1.0 percent, it added.

According to FAO, its Vegetable Oil Price Index averaged 150.1 points in October, down 2.4 points (1.6 percent) month-on-month and standing nearly 20 percent below its year-earlier level.

The continued decrease of the index was driven by lower world prices of palm, soy and rapeseed oils, which more than offset higher sunflower seed oil quotations, it said.

In October, international palm oil prices declined slightly from the previous month, broadly weighed by lingering heavy stock levels in Southeast Asia, despite concerns over unfavourable weather prospects in pockets of major growing regions, said FAO.

Meanwhile, world soy and rapeseed oil quotations dropped on outlooks of ample supplies in the coming months. In contrast, international sunflower oil prices rebounded moderately after falling continuously over the past half a year due to uncertainty over the future of the export corridor in Ukraine amid rising geopolitical tensions, it added.

According to FAO, its Dairy Price Index averaged 140.1 points in October, down 2.5 points (1.7 percent) from September, marking the fourth consecutive monthly decline. Nevertheless, it remained 18.7 points (15.4 percent) above its value a year ago.

FAO said in October, international prices of all dairy products covered by the index fell. Lower-than-anticipated purchases by China and lacklustre demand for spot supplies as most importing countries were well covered for their immediate needs, together with the impact of the weaker Euro against the United States dollar, underpinned the drop in world dairy prices.

It said market uncertainty about the direction of demand for dairy products, due to soaring inflation and economic downturns, also pressured international dairy prices down.

“Nonetheless, demand for some dairy products in other countries in Asia increased, containing potential larger declines in dairy prices,” it added.

According to FAO, its Meat Price Index averaged 118.4 points in October, down 1.6 points (1.4 percent) from September, marking the fourth consecutive monthly decline, with world prices of all meat types registering drops.

However, the index remained 6.4 points (5.8 percent) above its value a year ago, it added.

FAO said that international ovine (lamb and mutton) meat prices registered the steepest drop, underpinned by the impacts of currency movements and seasonally increasing supplies from Oceania amid subdued import purchases.

“Likewise, world pig meat prices dropped substantially on weak global import purchases in tandem with softer internal demand in some leading producing countries.”

Meanwhile, FAO said world bovine prices fell slightly on high current supplies and rising availability of slaughter cattle, notably in Brazil.

It said that the downward trend in the international poultry meat prices continued for the fourth consecutive month, as export availabilities outpaced subdued global demand, notwithstanding setbacks to production stemming from avian influenza outbreaks and high feed costs.

According to the FAO, its Sugar Price Index averaged 109 points in October, down 0.7 points (0.6 percent) from September and 10.1 points (8.5 percent) from its value in the corresponding month last year.

“The positive global supply outlook for the 2022/23 season, further bolstered by improved production prospects in India, weighed on world sugar prices in October.”

However, concerns over rains hampering harvest progress in Brazil and delaying the start of the season in India limited the month-on-month price decline, said FAO.

It said additional support that prevented world sugar prices from dropping further was lent by a stronger import demand, particularly from Indonesia and China, along with higher ethanol price quotations in Brazil, prompting a greater use of sugarcane to produce ethanol.

LOWER FORECASTS FOR CEREALS

Meanwhile, in a separate Cereal Supply and Demand Brief, FAO said that its forecast for world cereal production in 2022 has been lowered by 4.9 million tonnes since last month and is now pegged at 2,764 million tonnes, down 1.8 percent (50.8 million tonnes) year-on-year.

It said that most of this month’s reduction relates to wheat, while there was also a small downward revision to the world production forecast for coarse grains.

“Incorporating a 3.4-million-tonne cutback this month, global wheat production is now forecast at 783.8 million tonnes in 2022, still 0.6 percent (4.5 million tonnes) above the 2021 out-turn and an all-time high.”

The month-on-month downward revision almost entirely concerns the wheat crop in the United States of America, reflecting downgrades to yields and harvested area, said FAO.

Elsewhere, FAO said with the harvesting of the 2022 wheat crop drawing to an end, production forecasts remained unchanged.

FAO said its forecast for global coarse grain production for 2022 was also trimmed by 1.3 million tonnes, and now stands at 1,467 million tonnes, 2.8 percent lower on a yearly basis, marking the first production downturn in four years.

It said most of this month’s reduction stems from cuts made to expected maize outputs in the United States and the European Union, where recent assessments indicated more substantial drought impacts than previously estimated.

In Ukraine, with the maize harvest underway, the production forecast has been raised, underpinned by expectations of larger harvested area, as the country’s exports from the Black Sea ports has partially eased storage constraints, it added.

“As for rice, production expectations have improved for Indonesia since October, following official indications of a somewhat larger expansion in area under paddy than previously anticipated by FAO.”

FAO said combined with less downcast than previously envisaged results reported by Peru, this upward revision largely offset some cutbacks to output prospects, namely for Viet Nam and Nigeria.

“As a result, world rice production in 2022/23 is now forecast at 512.6 million tonnes (milled basis), 2.4 percent below the 2021 all-time peak, but still an overall average crop.”

FAO noted that planting of the 2023 winter wheat crop has begun in northern hemisphere countries and will start in 2023 in the countries south of the equator.

It said high crop prices are expected to sustain large plantings in 2023. However, elevated production costs could potentially limit area expansions.

In the United States, winter wheat plantings progressed at an average pace in October, despite prolonged drought conditions in parts of key wheat-producing states.

In the European Union, sowings were completed in the northern countries in September and are progressing well in most other countries under conducive weather conditions, except for dryness in parts of Spain, Italy and Romania.

In the Russian Federation, with the planting period nearing its end, the pace of winter wheat sowings was reported to be lower year-on-year as of mid-October, as heavy rainfall impeded sowing operations, said FAO.

“In Ukraine, severe liquidity constraints due to the war is seen reducing wheat acreage, while also heavy rains have slowed the pace of plantings.”

Meanwhile, FAO said in Asia, wheat sowings are foreseen to remain at above-average levels in China (mainland) and India, where remunerative minimum support prices are maintaining the attractiveness of wheat, adding that beneficial weather in both countries is also supporting planting operations.

“As many areas remain flooded in Pakistan, the sowing of the rabi winter wheat crop, which normally takes place between October and December, could be severely impeded.”

Noting that sowing of the 2023 coarse grain crops is underway in southern hemisphere countries, FAO said that in Brazil, official estimations indicate an increasing maize acreage in 2023.

“Assuming better weather conditions in the country after the dry periods of last year, an upturn in yields could also support a second bumper crop in 2023.”

FAO said that in South Africa, provisional planting intentions point to a likely moderate contraction in the maize acreage from last year.

At 2,778 million tonnes, FAO said that its forecast for world cereal utilization in 2022/23 points to a 0.7 percent decline from the 2021/22 level, down 5.4 million tonnes since last month almost entirely on lower global coarse grain utilization.

“This month’s 5.9-million-tonne downward revision to global coarse grain utilization is primarily attributed to expectations of a lower industrial use of maize (especially in China and the United States), as well as lower feed and industrial uses of barley.”

With these revisions, the global coarse grain utilization forecast for 2022/23 now stands at 1,485 million tonnes, down 1.2 percent from 2021/22, representing the first fall in over a decade, said FAO.

Meanwhile, FAO said total global wheat utilization is still forecast to rise marginally in 2022/23, by 0.3 percent, to 775 million tonnes, with growth in food consumption and other uses seen offsetting a likely fall in feed use.

FAO said global utilization of rice in 2022/23 is pegged at 518.3 million tonnes, down 0.7 percent year-on-year due to expected contractions in feed and industrial uses.

FAO said world cereal stocks are forecast to contract by 2.0 percent below opening levels by the end of seasons in 2023, to 841 million tonnes, down 7.3 million tonnes from last month’s forecast.

Global wheat stocks are still forecast to rise by 2.0 percent above their opening levels, despite a 3.1-million-tonne downward revision this month, it added.

“This last downward revision mostly reflects expectations of lower inventories in Ukraine, India and the United States.”

Similarly, a downward revision to maize stocks in Ukraine, resulting from higher exports, as well as lower maize stocks in the United States, due to lower production prospects, are behind a 4.6-million-tonne cut to global coarse grain stocks this month, said FAO.

“With these revisions, global stocks of coarse grains, now forecast at 347 million tonnes, are seen falling by 5.3 percent below their opening levels to reach their lowest level since 2013/14, largely attributed to an expected 5.5- percent contraction in global maize stocks.”

FAO said that its forecast for world rice stocks at the end of the 2022/23 marketing years stands at 193.4 million tonnes, down 1.8 percent from their record opening levels, but still the third largest inventories on record.

It said most of the forecast year-to-year decline is expected to concern inventories held by rice exporters, although importers, most notably Colombia, the European Union, Senegal and Sri Lanka, are also seen drawing on their reserves.

Forecast at 469 million tonnes, world trade in cereals in 2022/23 is predicted to register a 2.2-percent contraction from the 2021/22 level, despite a 1.7 million tonne upward revision from last month, said FAO.

It said that based on a stronger shipment pace until late October under the Black Sea Grain Initiative, expected higher wheat export prospects for Ukraine have lifted the global wheat trade forecast for 2022/23 (July/June) by 1.9 million tonnes this month.

Nevertheless, now pegged at 194 million tonnes, FAO said that its global wheat trade forecast still points to a 1.0 percent decline from the 2021/22 level.

FAO said that nearly unchanged this month at 223 million tonnes, global trade in coarse grains is also forecast to decline in 2022/23 (July/June) by 3.4 percent, mostly reflecting contractions in global barley and sorghum trade, while maize trade is seen falling only marginally.

This month, it said, an upward revision for Ukraine’s maize export forecast balanced foreseen smaller sales from the United States, the European Union and the Russian Federation, keeping the global maize 2022/23 (July/June) trade forecast near 180 million tonnes.

It said after three successive years of expansion, international trade in rice could subside by 1.6 percent in 2023 (January-December) to 52.9 million tonnes.

FAO said that with the exception of the Americas and Oceania, most regions are expected to import less rice year-on-year.

However, the largest retreat in absolute terms could concern imports by Asian countries, it added. +