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World food prices climb to new peaks

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Rome, November 4, 2021 - according to a report released by the food and Agriculture Organization of the United Nations (FAO) on November 4, the world food price index soared to a new peak, reaching the highest level since July 2011. The FAO food price index, which tracks the monthly changes in the international prices of a global basket of food commodities, averaged 133.2 points in October, up 3.9% month on month, realizing the third consecutive month of rise.


The FAO grain price index increased by 3.2% month on month in October, and the world wheat price rose by 5% under the influence of the global supply tightening caused by the poor harvest of major exporting countries such as Canada, Russia and the United States. International prices of other major cereals also rose month on month. In October, the FAO vegetable oil price index rose 9.6%, a record high. Higher prices for palm oil, soybean oil, sunflower oil and rapeseed oil contributed to this growth. Palm oil prices rose for the fourth consecutive month in the same month, mainly because Malaysia's current shortage of migrant labor caused continuous concerns about its low production.


The FAO dairy price index rose by 2.6 points compared with September, which is behind the hoarding of stocks by global buyers to ensure supply, resulting in generally strong import demand for butter, skimmed milk powder and whole milk powder. In contrast, the supply of major cheese producing countries is sufficient to meet the global import demand, so their prices remain basically stable.


The FAO meat price index fell 0.7% from the revised value in September, the third consecutive month of decline. International quotations for pork and beef fell one after another. The former was due to the reduction of procurement in China, while the latter was due to the sharp decline in supply quotations from Brazil. In contrast, the prospect of expansion of high global demand and low production has driven up the prices of poultry and mutton.


The FAO sugar price index fell 1.8% month on month, showing a decline for the first time after rising for six consecutive months. The limited global import demand and the prospect of a large export supply from India and Thailand combined with the weakening of the Brazilian real relative to the US dollar triggered the decline of sugar prices.


Grain production will reach a new high in 2021, but inventory is expected to decline


FAO also released the latest issue of grain supply and demand bulletin today. Its latest forecast shows that although the world grain output is expected to reach a new high in 2021, the global grain inventory will decline in 2021 / 22.


The latest forecast of world grain production in 2021 is 2.793 billion tons, and the month on month decrease of 6.7 million tons is mainly contributed by the expected reduction of wheat production in Iran, Turkey and the United States. In contrast, the global coarse grain production forecast has been raised. The increase in world corn production is due to the better per unit yield in Brazil and India than previously expected, and the prospects of several West African countries have also improved. Global grain production is expected to be higher than last year, setting a new record.


The forecast of the world's total grain consumption in 2021 / 22 is 2.812 billion tons, an increase of 1.7% over the estimated level in 2020 / 21. The growth of global wheat grain consumption, which keeps pace with the world population, is expected to be the main reason behind it, while the feed and industrial consumption of corn are expected to rise, which also contributes to the higher than expected growth in this year.


The forecast of world grain inventory at the end of the quarter in 2022 decreased by 0.8% compared with the beginning level to 819 million tons. Therefore, the ratio of world grain stocks to consumption is expected to decline slightly from 29.4% in 2020 / 21 to 28.5% in 2021 / 22, but it is still at an appropriate level. The stronger than expected global trade volume of wheat and rice triggered an increase. It is currently predicted that the world grain trade volume will rise in 2021 / 22 and reach a new record level of 478 million tons, 0.3% higher than that in 2020 / 21.


Source: FAO