World food prices in February at all-time high

The benchmark gauge for world food prices went up in February, reaching an all-time high, led by vegetable oils and dairy products, the UN's Food and Agriculture Organization (FAO) said.

The FAO Food Price Index averaged 140.7 points in February, up 3.9 per cent from January, 20.7 per cent above its level a year earlier, and 3.1 points higher than reached in February 2011.

The Index tracks monthly changes in the international prices of commonly-traded food commodities.

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The FAO Vegetable Oils Price Index led the increase, rising 8.5 per cent from the previous month to reach a new record high, mostly driven by increased quotations for palm, soy and sunflower oils.

The sharp increase in the vegetable price index was principally driven by sustained global import demand, which coincided with a few supply-side factors, including reduced export availabilities of palm oil from Indonesia, the world's leading exporter, lower soybean production prospects in South America, and concerns about lower sunflower oil exports due to disruptions in the Black Sea region.

The FAO Dairy Price Index averaged 6.4 per cent higher in February than January, underpinned by lower-than-expected milk supplies in Western Europe and Oceania, as well as persistent import demand, especially from North Asia and the Middle East.

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The FAO Cereal Price Index increased 3.0 per cent from the previous month, led by rising quotations for coarse grains, with international maize prices up 5.1 per cent, due to a combination of continued concerns over crop conditions in South America, uncertainty about maize exports from Ukraine, and rising wheat export prices.

World wheat prices increased by 2.1 per cent, largely reflecting uncertainty about global supply flows from Black Sea ports.

International rice prices increased by 1.1 per cent, sustained by strong demand for fragrant rice from Near East Asian buyers and the appreciation of the currencies of some exporters against the US dollar.

FAO also released its latest Cereal Supply and Demand Brief, with a preliminary forecast for worldwide cereal output in 2022.

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Global wheat production is seen on course to increase to 790 million tonnes, with anticipated high yields and extensive planting in North America and Asia, offsetting a likely slight decrease in the European Union and the adverse impact of drought conditions on crops in some of the North African countries.

Maize harvesting will begin soon in the Southern Hemisphere, with Brazil's output foreseen reaching a record high and production in Argentina and South Africa above their average levels.

FAO has also updated its forecast for world cereal production in 2021, now pegged at 2,796 million tonnes, a 0.7 per cent increase from the year before.

Global cereal utilisation in 2021/2022 is now seen at 2,802 million tonnes, a 1.5 per cent annual increase. Global cereal stocks ending in 2022 are forecast to grow slightly over the year to 836 million tonnes.

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On those estimates, the worldwide cereals stocks-to-use ratio would stand at 29.1 per cent, "marking an eight-year low, but still indicating an overall comfortable supply level", according to FAO.

FAO also raised its forecast for world trade in cereals to 484 million tonnes, up 0.9 per cent from the 2020/2021 level. This forecast does not assume potential impacts from the conflict in Ukraine. FAO is closely monitoring the developments and will assess those impacts in due course.

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