The United Nations food price gauge climbed for a twelfth month in a row in May 2021, the longest run in a decade. It reached its highest reading since September 2011, according to the Food and Agriculture Organization (FAO).
The FAO Food Price Index averaged 127.1 points. That was 4.8 per cent above April and 39.7 per cent above a year earlier. The monthly jump was the biggest since October 2010, and the index now sits only 7.6 per cent under its February 2011 peak of 137.6 points. Oils, sugar and cereals led the climb, with meat and dairy firmer too.
Oils, sugar and grain
Vegetable oils averaged 174.7 points, up 7.8 per cent on the month. Palm oil hit its highest quotations since February 2011, because production growth in Southeast Asia was slow while import demand rose. Soy oil drew support from biodiesel demand, and rapeseed oil from tight global supply.
Sugar averaged 106.7 points, up 6.8 per cent and the highest since March 2017. Harvest delays and worries over yields in Brazil, the largest exporter, pushed it up. Large export volumes from India kept the gain from being bigger.
Cereals averaged 133.1 points, up 6.0 per cent from April and 36.6 per cent above May 2020. Maize rose 8.8 per cent, its highest level since January 2013, though prices eased late in the month on hopes for bigger U.S. crops. Barley gained 5.4 per cent and sorghum 3.6 per cent. Wheat averaged 6.8 per cent higher than April. Rice held steady.
Meat averaged 105.0 points, up 2.2 per cent, with East Asian buyers, mainly China, buying faster. Dairy rose 1.5 per cent to 120.8 points and has now gone a full year without a monthly decline. Butter fell, ending an eleven-month rally.
Thin margin for error
Drought in key Brazilian growing regions is hurting crops from corn to coffee, according to a report carried by Al Jazeera. China’s very large grain purchases have run down world stockpiles. Higher costs are reaching store shelves from Kenya to Mexico, and import-dependent poor countries have the least room to absorb them.
Abdolreza Abbassian, a senior economist at the FAO, said the market is exposed. “We have very little room for any production shock,” he said. “Any of those things could push prices up further than they are now, and then we could start getting worried.”
Price spikes in 2008 and 2011 brought food riots in more than 30 countries. Abbassian said conditions today are not like 2008-10, when inventories were really low. “However, we are in sort of a borderline,” he said, adding that Northern Hemisphere summer weather would decide whether U.S. and European harvests can make up for shortfalls elsewhere.
Sources
- Global food prices surge again, stoking inflation fears
- Global Food Prices Surge in May to Highest Level Since 2011 | Business
- Why global food prices are higher today than for most of modern history
