Global food prices bounced back in August following two consecutive months of decline, led by strong gains in the international price quotations for sugar, wheat and vegetable oils, the UN's Food and Agriculture Organization (FAO) said.
The FAO Food Price Index that tracks international market prices of five major food commodity groups, averaged 127.4 points in August, up 3.1 percent from July and 32.9 percent from the same month in 2020, the UN body said in a statement.
The Sugar Price Index surged by 9.6 percent in its fifth monthly increase in a row, pushed up by concerns over frost damage to crops in Brazil, the world's largest sugar exporter. The increase was mitigated by good production prospects in India and the European Union as well as by a decline in crude oil prices and a weakening of the Brazilian real. However, sugar hit the price index's highest level since February 2017.
The Vegetable Oil Price Index increased by 6.7 percent in August, with international palm oil prices reverting to historic highs due to protracted concerns over below-potential production and resulting inventory drawdowns in Malaysia. Quotations for rapeseed oil and sunflower oil also rose.
The Cereal Price Index went up 3.4 percent on a monthly basis. World wheat prices jumped by 8.8 percent due to reduced harvest expectations in several major exporting countries. Maize prices, by contrast, declined 0.9 percent as improved production prospects in Argentina, the European Union and Ukraine moderated the lowered production forecasts in Brazil and the United States of America. International rice prices remained on a downward trajectory.
The Meat Price Index was marginally up from July, as strong purchases from China supported ovine and bovine meat prices and solid import demand from East Asia and the Middle East buoyed poultry prices. Pig meat prices, by contrast, fell due to China's continued decline in purchases and weak internal demand in Europe.
The Dairy Price Index was the sole sub-index posting a decline in August, as international quotations for milk powders declined amid a weak global import demand and seasonally rising export availabilities in Oceania, more than offsetting rising butter and cheese prices.
FAO's new Cereal Supply and Demand Brief
The Rome-based organization also said that worldwide cereal harvests would come in at nearly 2.788 billion tonnes in 2021, down on its previous estimate of 2.817 billion tonnes but still up on 2020 levels.
Among the major cereals, the forecast for wheat production saw the biggest downward revision -- down 15.2 million tonnes since July to 769.5 million tonnes -- due predominantly to the negative impact of prolonged drought conditions in North America as well as adverse weather in Kazakhstan and the Russian Federation.
Global coarse grains output is forecast to grow by 1.3 percent in 2021 to 1 499 million tonnes, even as production in Brazil is expected to contract, while rice output is seen rising by 0.9 percent year-on-year to reach an all-time high of 519 million tonnes, buoyed by record yields reported for Viet Nam.
FAO now projects worldwide cereal utilization in 2021/22 to rise by 1.4 percent from the previous marketing year to 2.809 billion tonnes, supported by a strong growth in feed use as well as higher food consumption.
The estimate for world cereal stocks by the close of seasons in 2021 to 2022 was lowered by 27.0 million tonnes since July to 809 million tonnes, pointing to a decline of 0.9% on stock levels registered at the start of the period, FAO said.
Rice stocks worldwide are on track to reach their second highest level on record, while dry weather is expected to squeeze wheat inventories - with ending stocks in the United States of America reaching an eight-year low and those of Canada dipping to their lowest level in 40 years.
Overall, the world stocks-to-use ratio for cereals is projected at 28.1 percent, down from 29.9 percent in 2021/22 "but still indicating a relatively comfortable supply from a historical perspective," FAO said.
World trade in cereals is now expected to decline in 2021/22, contracting by 1.3 percent to 466 million tonnes with foreseen decreases in wheat and coarse grains outweighing a rising world trade of rice.
Analysts warn that price spikes for food are here to stay and shoppers shouldn’t expect relief any time soon.