FAO Food Price Index Rose Slightly in March

After seven months of declines, the FAO Food Price Index rose slightly in March due to increased vegetable oil, dairy, and meat prices. The Index remained 7.7 percent below its March 2023 levels.

The Cereal Price Index fell by 2.6 percent from February and 20 percent from March 2023. Strong international export competition coupled with favorable harvest prospects in several major producing regions drove wheat prices down. Rice prices also fell by nearly 2 percent due to slowing import demand. Alternatively, maize prices rose slightly due to increased purchases from China and decreased supplies from Ukraine. However, ongoing harvests in South America tempered the increase.

The Vegetable Oil Price Index rose by 8 percent in March to reach a one-year high. Rising crude oil prices were a contributing factor to the increase. Higher palm oil prices were driven by seasonally lower output in some producing countries coupled with strong demand in Southeast Asia. Soy oil prices also rose in March following several years of low prices due to increasing demand from the biofuel sector. Sunflower and rapeseed oil prices rose based on increased import demand.

The Dairy Price Index and Meat Price Index both rose in March as well, by 2.9 percent and 1.7 percent, respectively. The Sugar Price Index declined by 5.4 percent.

This month’s AMIS Market Monitor provides a look at the outcome of the 13th Ministerial Conference (MC13) of the World Trade Organization (WTO), which took place in the United Arab Emirates in February. Member countries were unable to come to an agreement about several key agricultural trade issues, including how to address the challenges posed by WTO rules on agricultural support for least developed countries when those countries buy food at government-set prices for public stocks. As risks to global food security continue to escalate due to climate change, conflict, and other factors, agreements on these critical issues impacting food and agricultural trade are more important than ever, the report emphasizes.

Global wheat production prospects increased slightly in March, but production is still expected to be below its 2022 level. Wheat utilization forecasts also increased in March, with utilization expected to be 2 percent higher than the previous year’s level due to higher feed and other use. Wheat trade forecasts rose based on increased exports from Russia and rising import demand in several regions. Global wheat ending stocks are expected to be 2 percent below their opening levels.

Maize production for 2023 is expected to be 5.4 percent higher than 2022 levels due to increased estimates from Argentina and the European Union. Maize utilization forecasts also rose in March due to increased feed and other use. Trade forecasts remained the same in March, with total trade for 2023-2024 expected to be 3.3 percent above the previous year’s level. Global maize ending stock prospects declined in March, but total ending stocks are expected to be over 10 percent above their opening levels.

Rice production prospects for 2023-2024 remained virtually unchanged in March, with overall rice production expected to recover from its decline in the previous year. Rice utilization is expected to fall from the previous year due to reductions in non-food use. Rice trade is expected to decline in 2024 due to cuts in imports, while global rice ending stock expectations rose slightly in March due to higher estimates from Indonesia.

Global soybean production prospects for 2023-2024 remained stable in March, while utilization forecasts rose slightly due to higher expected crushings in China and India. Soybean trade expectations also rose in March due to expected higher imports by China and exports by Brazil and Argentina. Global soybean ending stock forecasts also increased slightly, with ending stocks expected to be 10.5 percent higher than their opening levels.

AMIS reports natural gas markets continue to see ample supplies due to high inventories and low winter demand in the Northern hemisphere. Continued disruptions in the Red Sea region are expected to add to shipping costs through the coming spring fertilizer application season. Ammonia experienced stable prices in March, while global demand for potash remained slow and could drive prices down in some markets. Phosphorus fertilizer markets experienced improved supplies due to a reduction in export restrictions by China; AMIS reports that the ease of these restrictions should push prices down in the coming weeks. Nitrogen prices fell in March due to slowing demand and ample supplies in exporting countries.  

Sara Gustafson is a freelance communications consultant.