Global Food Prices Rise Further

Specifically, the grain price index averaged 132.5 points in September, an increase of 2% from the previous month. Among the major cereals, the global wheat price in September led the way with a month-on-month increase of nearly 4% and a year-on-year increase of 41%. While global demand is strong, export supplies are tightening, which continues to push up international wheat prices. Moderate trade activity supported the rise in rice prices in September, which are now higher than the multi-year lows reached in August 2021. International barley prices also rose by 2.6% in September, mainly due to strong demand, lowered production prospects in Russia, and other market increases. In contrast, world corn prices generally remained stable, with a modest increase of 0.3%. This was due to the improvement in global crop prospects and the start of the harvest season in the United States and Ukraine, which offset the upward pressure caused by the hurricane-induced interruption of U.S. port operations. Nevertheless, corn prices are still nearly 38% higher than the same period in 2020. FAO experts pointed out that among the main grains, wheat is the focus of attention in the coming weeks, as demand will withstand the test of rapid price increases.

The vegetable oil price index averaged 168.6 points in September, up 1.7% month-on-month and about 60% higher year-on-year. The increase was mainly due to higher prices of palm oil and rapeseed oil, while the quotations of soybean oil and sunflower oil showed a downward trend. International palm oil prices have strengthened for the third consecutive month and have reached a 10-year high. The reason is that while global import demand is strong, continued labor shortages have triggered market concerns about Malaysia's production below potential levels. The long-term tight global supply of rapeseed oil has also driven its price to rise significantly. In contrast, the decline in international soybean oil and sunflower oil prices is due to the uncertainty in the amount of soybean oil absorbed by the biodiesel industry and the sufficient global supply prospects for the 2021/2022 crushing season.

The dairy product price index averaged 117.9 points in September, up 1.5% month-on-month. In September, the international quotations of all dairy products in the index rose. Among them, skimmed milk powder and butter rose strongly. In addition to the stable global import demand, it was also affected by limited export supplies, especially low inventories in Europe. The combined effect of the seasonal decline in milk production. The limited milk production in Oceania, which is at the beginning of the new season, coupled with low stocks, has also provided support for the rise in world butter and skimmed milk powder prices. At the same time, under the combined effect of limited production in Europe, low inventories and stable internal demand, the prices of whole milk powder and cheese rose moderately.

The meat price index averaged 115.5 points in September, which was basically the same as the previous month, while the annualized increase was 26.3%. In September, the global demand for mutton was strong and the export supply was still tight, and its international quotations rose further as a result. The limited supply of beef cattle in Oceania and South America has put pressure on global supply, and beef prices have increased unabated. Poultry meat quotations declined after rising for 9 consecutive months due to increased global supply. International pork prices fell due to the decline in China's import demand and the sluggish domestic demand represented by Europe.

The sugar price index averaged 121.2 points in September, an increase of 0.5% month-on-month and a year-on-year increase of 53.5%. Brazil, the largest sugar exporter, suffered prolonged dry weather and frost, which caused concerns about production cuts and continued to support the strengthening of international sugar prices. In addition, rising ethanol prices have also prompted Brazil to use more sugarcane for ethanol production. However, the slowdown in global sugar import demand and good production prospects in major exporting countries such as India and Thailand have suppressed upward pressure on their prices.

The FAO Food Price Index is a measure of the monthly changes in the international prices of a package of food commodities. It is composed of the weighted average of the price indices of 5 commodity categories, and the weight is the average export trade proportion of each commodity category from 2014 to 2016.