Latest FAO Food Price Index and AMIS Market Monitor Released
In January 2018, the FAO Food Price Index rose by 1.8 percent from its end-of-the-year levels. This increase was driven mainly by a sharp rise in dairy prices, as well as slighter increases in vegetable oil and sugar prices. The Index remained 2.2 percent below January 2017 levels, however.
The Cereal Price Index rose only marginally from December 2018 due to increases in rice and maize prices. Poor weather conditions in South America contributed to increased maize prices, while strong demand and a firming Thai bhat drove rice prices up. However, the Cereal Price Index reached 11.5 percent higher than its January 2018 levels, due to lower 2018 production, tightening export supplies, and firm global demand. FAO also cites the absence of several market reports from the United States, due to the recent government shutdown, as an explanation for the relatively quiet market in January.
The Vegetable Oil Price Index rose 4.3 percent in January, the second consecutive month of increases. Palm oil prices were the primary driver due to declining production in several major producing countries and strong global import demand. Demand for South American soybean oil also drove up the price for that commodity.
The Meat Price Index remained unchanged in January, while sugar prices rose 2.4 percent. The Dairy Price Index, on the other hand, shot up by 7.2 percent due to limited export supplies from Europe and an anticipated decline in exports from Oceania in the coming months.
The latest edition of the AMIS Market Monitor sees a positive forecast for global commodities, despite weather concerns in the southern hemisphere.
The 2018 forecast for global wheat production was increased this month, but wheat crops are still expected to remain well below the records seen in 2017. Increased feed use in Australia supported higher forecasts for 2018-2019 utilization, but overall trade forecasts fell slightly due to lower import prospects from several regions. Forecasts for 2019 ending stocks rose due to revisions from Canada and the Russian Federation.
Higher forecasts for production in the EU, Nigeria, Ukraine, and the Russian Federation lifted total maize production expectations. Maize utilization and trade prospects also rose, due to higher feed use and strong import demand, respectively. Larger maize inventories in Argentina, the EU, Nigeria, and the US led to higher anticipated 2019 ending stocks.
Forecasts for 2018 rice production rose due to increased expected yields in China and higher anticipated plantings in Pakistan. Per capita food use for rice is expected to rise slightly, driving up 2018-2019 utilization rates; 2018-2019 rice trade is also expected to increase as a result of stronger Chinese exports. Higher inventories in China and India are expected to raise 2019 rice ending stocks.
Soybean production forecasts for 2018-2019 fell slightly this month due to poor weather conditions in South America. Soybean utilization rates remained unchanged, while forecasts for 2018-2019 trade fell slightly due to anticipated reductions in Chinese exports. Lower expected inventories in Argentina, Paraguay, and China reduced prospects for 2019 ending stocks.
Global fertilizer prices either fell or remained stable in January. Weak global demand and lower natural gas prices drove down ammonia prices, while weaker demand led to a decrease in urea prices despite lower Chinese exports. Lower natural gas prices also contributed to a slight decline in the price of DAP, as did reduced seasonal demand from some countries. Potash prices have remained steady since September 2018.