Newman: Global food prices rose for the 12th month in a row in May, up nearly 40% year over year, according to the United Nations’ food price index.
, Global inflation is raising prices on virtually everything, from food to steel to lumber and energy. In countries that belong to the Organization for Economic Cooperation and Development, prices surged in April to the highest rate since 2008 the United Nations food agency said on Thursday. Last month was also the sharpest monthly rise in average food prices in over a decade, spiking 4.8% from April to May.
Higher usage of bio diesels and moderate global price increases for meat and dairy products also contributed to the steep rise in global food prices.
The UN report said international palm oil quotations reached their highest level since February 2011 due to slow production growth of palm oil in Southeast Asian countries and rising global import needs are keeping inventories low in leading exporting nations.
Abdolreza Abbassian, senior economist for the UN Food and Agriculture Organization, says surprising demand for corn in China, an ongoing drought in Brazil and increased globaluse of vegetable oils, sugar and cereals has caused prices to surge rapidly around the globe.
“The demand, really I would say, is almost surprising everyone,” Abbassian told CNN Business. “This demand requires a strong supply response.”
“The demand has been quite robust in the vegetable oil sector in general,” Abbassian said.
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Brazil has cut back on its corn and sugar experts amid its drought, according to Abbassian, who said speculation over how much corn Brazil and farmers in the US mightproduce this summer and early fall is a point of concern for food supply administrators and economists.
“This is the big question on everybody’s mind right now,” he said. “In the cereal sector, there were a lot of problems in terms of what will happen with this year’s production. There’s a lot of talk about droughts in Brazil really affecting the corn market.”
US food prices haven’t yet returned to normal this year after pandemicgrocery buyingcaused them to skyrocket a year ago. Overall food prices in the US were up 2.4% in April from the same period a year ago, while fruit and vegetable prices rose 3.3%.
The April figure was previously given as 120.9
FAO also issued its first forecast for world cereal production in 2021, predicting output of nearly 2.821 billion tonnes — a new record and 1.9% up on 2020 levels.
The Food and Agriculture Organization’s food price index, which measures monthly changes for a basket of cereals, oilseeds, dairy products, meat and sugar, averaged 127.1 points last month versus a revised 121.3 in April. FAO issued its first forecast for world cereal production in 2021, predicting output of nearly 2.821 billion tonnes — a new record and 1.9% up on 2020 levels.
The April figure was previously given as 120.9.On a year-on-year basis, prices were up 39.7% in May.
FAO’s cereal price index rose 6.0% in May month-on-month and 36.6% year-on-year. Maize prices led the surge and are now 89.9% above their year-earlier value, however FAO said they fell back at the end of the month, lifted by an improved production outlook in the United States.
The vegetable oil price index jumped 7.8% in May, lifted primarily by rising palm, soy and rapeseed oil quotations. Palm oil prices were boosted by slow production growth in Southeast Asia, while prospects of robust global demand, especially from the biodiesel sector, drove up soyoil prices.
The sugar index posted a 6.8% month-on-month gain, due largely to harvest delays and concerns over reduced crop yields in Brazil, the world’s largest sugar exporter, FAO said.
The meat index rose 2.2% from April, with quotations for all meat types buoyed by a faster pace of import purchases by east Asian countries, mainly China.
Dairy prices rose 1.8% on a monthly basis and were up 28% on a year earlier. The increase was led by “solid import demand” for skim and whole milk powders, while butter prices fell for the first time in almost a year on increased export supplies from New Zealand.
FAO said its forecast for record world cereal production this year was underpinned by a projected 3.7% annual growth in maize output. Global wheat production was seen rising 1.4% year-on-year, while rice production was forecast to grow 1.0%.
World cereal utilization in 2021/22 was seen increasing by 1.7% to a new peak of 2.826 billion tonnes, just above production levels. “Total cereal food consumption is forecast to rise in tandem with world population,” FAO said.
