GLOBAL – The FAO Food Price Index, which tracks monthly changes in the international prices of a basket of globally traded food commodities, averaged 120.7 points in August, down slightly from the revised July figure and 1.1% below its value in August 2023.
The FAO Cereal Price Index dropped by 0.5% from July, driven by lower global wheat export prices amid competitively priced Black Sea supplies and higher-than-expected production in Argentina and the United States.
Conversely, world maize prices edged up due to the impact of heatwaves on yields in parts of Europe and North America.
The FAO All-Rice Price Index increased by 0.6%, with higher quotations for non-Indica varieties, reflecting seasonal tightness and currency appreciations of some exporting countries against the US dollar.
Despite these declines, global trade dynamics reveal a complex landscape. The FAO Vegetable Oil Price Index rose by 0.8% from July to reach a 20-month high, as rising international palm oil prices more than offset declines in soy, sunflower, and rapeseed oil quotations.
Additionally, in its latest Cereal Supply and Demand Brief, the FAO trimmed its forecast for global cereal production in 2024, now pegged at 2.851 billion tonnes, closely aligning with 2023 levels.
Global Grain Market adjusts to uncertain conditions
The FAO’s report underscores the continued volatility in global grain markets. Reduced harvest expectations for coarse grains, including maize, primarily due to hot and dry weather conditions in the European Union, Mexico, and Ukraine, have contributed to the revised forecast.
However, global wheat and rice output projections have been raised, with rice expected to reach a record 537 million tonnes in 2024.
The global cereal total utilization for the 2024-25 season is forecast to rise slightly to 2.852 billion tonnes, marking a 0.2% increase from the previous season.
The projected rise is driven by a record-high utilization of rice, reflecting accelerated growth in food intake demand. Meanwhile, world cereal stocks are forecast to expand by 1.2% by the end of the 2024-25 season, resulting in a global cereal stocks-to-use ratio of 30.7%.
Meanwhile, the international trade in cereals is projected to decline by 3.3% to 485.6 million tonnes for 2024-25, mainly due to lower traded volumes of coarse grains.
The global grain trade is adjusting to a confluence of factors, including adverse weather patterns, geopolitical tensions, and shifting market dynamics. For instance, the ongoing conflict in the Black Sea region has impacted wheat supplies, while currency fluctuations and trade policies continue to influence the pricing and movement of grains globally.
Looking ahead, industry stakeholders are closely monitoring the potential impact of El Niño weather patterns on the 2024-25 harvests, especially in key producing regions such as South America, Southeast Asia, and parts of Africa. With global cereal utilization and stocks projected to grow modestly, the grain sector may face continued price volatility and uncertainty.
Sign up to receive our email newsletters with the latest news updates and insights from Africa and the World HERE.
