The barometer of food commodity prices in international markets rose for the fourth consecutive month in November, led by strong demand for wheat and dairy products, the Food and Agriculture Organization of the United Nations (FAO) has revealed.

The FAO Food Price Index averaged 134.4 points in the month, its highest level since June 2011 and 1.2% higher than during October. The index, which tracks monthly changes in the international prices of commonly-traded food commodities, was 27.3% higher than its level in November 2020.

Dairy and cereal
The FAO Dairy Price Index led November’s aggregate rise, increasing by 3.4% the previous month. Strong global import demand persisted for butter and milk powders as buyers sought to secure spot supplies in anticipation of tightening markets.

The FAO Cereal Price Index increased by 3.1% in November from the previous month and was 23.2 percent higher than its year-ago level. Maize export prices rose slightly, while international rice prices remained steady. Notably, wheat prices hit their highest level since May 2011. 

The increase reflected strong demand amid tight supplies, especially higher-quality wheat. At the same time, prices were also supported by concerns about untimely rains in Australia and uncertainty regarding potential changes to export measures in the Russian Federation.

Sugar, oil and meat
The FAO Sugar Price Index was 1.4% higher in November than in October and nearly 40% above its November 2020 level. The increase was primarily driven by higher ethanol prices, though large shipments from India and a positive outlook for sugar exports by Thailand tempered the upward pressure on quotations.

The FAO Food Price Index averaged 134.4 points in the month, its highest level since June 2011 and 1.2% higher than during October.The FAO Vegetable Oil Price Index declined by 0.3% from a record high reached in October, reflecting lower values for soy and rapeseed oils as well as lower crude oil prices. International palm oil prices remained firm.

The FAO Meat Price Index decreased by 0.9%, its fourth consecutive monthly decline. Reduced pig meat purchases by China led to lower international quotations, while bovine prices also fell steeply on increased exportable supplies from Australia. Bovine and poultry meat prices were largely stable.

Record cereal production to keep markets supplied
FAO’s new Cereal Supply and Demand Brief forecasts world cereal production at 2,791 million metric tons in 2021, a new record and 0.7% higher than the previous year. Compared to 2020, worldwide coarse grains and rice outputs are expected to increase, respectively, by 1.4% and 0.9%, while that for wheat to dro by 1.0%.

World cereal utilization in 2021/22 is forecast to rise by 1.7% to 2,810 million metric tons, while world cereal stocks by the close of seasons in 2022 are predicted to decline by 0.9% from opening levels. The consequent stocks-to-use ratio of 28.6% “would still indicate a comfortable supply situation overall,” according to FAO.

FAO forecasts global trade in cereals in 2021/22 to increase by 0.7% to 480 million metric tons, with an anticipated 2.2% expansion in world wheat trade “more than offsetting” a likely contraction in coarse grains trade.

Last month, the FAO Food Price Index surged to a new peak reaching its highest level in a decade. The index highlighted the soaring cost of cereals and vegetable oils around the world, while noting that global food prices have increased 30% in the last year.