International quotations for rice and sugar went up in August mainly due to the adverse impact of weather on crops and trade restrictions imposed by exporters, according to the latest report published by the Food and Agriculture Organization of the United Nations (FAO) last Friday.
Based on its monthly Food Price Index, FAO noted that the All Rice Price Index rose by nearly 10 percent in August to reach a 15-year nominal high.
“[This reflects] trade disruptions in the aftermath of a ban on Indica white rice exports by India, the world’s largest rice exporter,” FAO said.
“Uncertainty about the ban’s duration and concerns over export restrictions caused supply-chain actors to hold on to stocks, re-negotiate contracts or stop making price offers, thereby limiting most trade to small volumes and previously concluded sales.”
FAO’s Sugar Price Index, meanwhile, rose by 1.3 percent from July, averaging in August as much as 34.1 percent higher than its value a year ago.
“The increase was mainly triggered by heightened concerns over the impact of the El Niño phenomenon on sugarcane crops, along with below-average rains in August and persistent dry weather conditions in Thailand,” FAO said.
“The large crop currently being harvested in Brazil limited the upward pressure on international sugar quotations, as did lower ethanol prices and the weakening of the Brazilian Real.”
Despite the increases in rice and sugar prices, the general food price index fell in August. It averaged 121.4 points in August, down 2.1 percent from July and as much as 24 percent below its March 2022 peak.
FAO said the Vegetable Oil Price Index fell by 3.1 percent in August, partly reversing a sharp 12.1 percent upward move in July.
“World prices of sunflower oil declined by nearly 8 percent during the month amid weakening global import demand and abundant offers from major exporters,” its report read.
“World quotations for soy oil dropped owing to improving soybean crop conditions in the United States of America, while those for palm oil fell moderately amid seasonally rising outputs in leading producing countries in Southeast Asia.”
FAO said the Cereal Price Index declined by 0.7 percent from July. International wheat prices fell by 3.8 percent in August amid higher seasonal availabilities from several leading exporters, while international coarse grain prices fell by 3.4 percent amid ample global supplies of maize from a record harvest in Brazil and the imminent start of the harvest in the United States.
The Dairy Price Index was also lower by 4 percent from July led by international quotations for whole milk powder and abundant supply from Oceania. International butter and cheese prices also dropped, due in part to lackluster market activities associated with the summer holidays in Europe.
“The FAO Meat Price Index dipped by 3.0 percent. World ovine prices fell the most, underpinned by a surge in export availabilities mainly from Australia and weaker demand from China. Robust supplies also nudged downwards the prices of pig, poultry and bovine meats,” the UN agency said.
Global cereal supply
FAO also released a new Cereal Supply and Demand Brief, which forecasts that world cereal production in 2023 will increase by 0.9 percent from the previous year to reach 2 815 million tons, on par with the record output realized in 2021.
“While global wheat production is set to decline by 2.6 percent from 2022, coarse grains total output is forecast to rise by 2.7 percent, with maize production seen reaching a new record of 1 215 million tons, buoyed by strong yields in Brazil and Ukraine,” it said.
Despite a slight downward revision since July, world rice output in 2023/24 is still seen recovering by 1.1 percent from the previous season.
World cereal utilization in the season ahead is forecast at 2 807 million tons, 0.8 percent above the 2022/23 level.
FAO said world cereal stocks at the close of 2023/24 marketing seasons would reach 878 million tons, a 2.2-percent annual increase, pointing to a world stocks-to-use ratio for cereals of 30.5 percent, which it deems an “overall comfortable global supply level from a historical perspective.”
World rice stocks are forecast to reach an all-time high of 198.1 million tons, driven up by India which together with China are estimated to hold nearly three quarters of this volume, like in previous seasons.
“Aggregate rice reserves held by the rest of countries are seen ending the year with a second successive contraction to a four-year low pegged at of 51.4 million tons.”
FAO lowered its forecast for world trade in cereals in 2023/24 to 466 million tons, a 1.7-percent drop from the previous marketing season. Traded volumes of wheat and maize are all predicted to decline, due to a mix of reasons, including falling exports by Ukraine due to trade disruptions associated with the ongoing war.
It has also lowered its forecast for world trade in rice from the July figure considering the stepped-up export restrictions by India. Although the duration of these restrictions and their extent of application are uncertain, if protracted and if El Niño induces production constraints in other Asian exporters, they could keep the predicted recovery in 2024 trade in rice modest, FAO said.