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By Adedapo Adesanya

Global food prices rose in January 2022, according to the Food and Agriculture Organization of the United Nations (FAO).

The FAO Food Price Index averaged 135.7 points in January, 1.1 percent higher than in December. The index tracks monthly changes in the international prices of commonly traded food products.

The FAO Vegetable Oil Price Index led the rebound in January, rising 4.2 percent month-on-month and reversing its December decline to a record high.

Quotations for all major oils rose, also supported by higher crude oil prices. Palm oil prices were largely supported by concerns over a possible reduction in export supplies from Indonesia, the world’s largest exporter, while soybean oil prices were supported by buying robust imports, particularly from India, rapeseed oil prices were pushed up by the continued tight supply, and sunflower oil prices were affected by the tightening supply and increasing global import demand.

Across all other food indices, the FAO Dairy Price Index rose 2.4%, its fifth consecutive monthly increase, with the largest increases recorded for skimmed milk powder and butter.

Reduced export supplies from Western Europe and below-average expectations for milk production in Oceania in the coming months have contributed to tight global dairy markets, as have processing and transport delays linked to shortages workforce related to COVID-19.

The FAO Cereal Price Index in January edged up 0.1 percent from December. Maize export prices rose 3.8% in the month, boosted by concerns over persistent drought in South America, while world wheat prices fell 3.1% at the end of the month. following abundant harvests in Australia and Argentina. Lower harvests and steady purchases by Asian buyers led to a 3.1% monthly increase in international rice prices.

The FAO Meat Price Index edged up in January, with world beef prices hitting a new high as global import demand outpaced export availabilities, while sheepmeat and poultry fell as export supplies exceeded import demand. Pig meat quotations rose slightly, partly as rising input costs dampened global supply.

The FAO Sugar Price Index was the only sub-index to post a decline in January, down 3.1% from the previous month on favorable production prospects in major exporter India and Thailand, as well as better rains and lower ethanol prices in Brazil.

The FAO has updated its forecast for world cereal production in 2021, which now stands at 2,793 million tonnes, an increase of 0.8% compared to the previous year.

World wheat production in 2021 is expected to be at the same level as in 2020, while production of coarse grains is expected to be 1.3% higher and that of rice by 0.7%, according to the latest FAO Bulletin on grain supply and demand, also released today.

This year, global wheat plantings are expected to increase, boosted by generally favorable weather conditions in the northern hemisphere, although high input costs may discourage further expansion. Prospects for maize are strong, with high prices pointing to record plantings in Argentina and Brazil.

World cereal utilization in 2021/22 is forecast to increase by 1.6% year-on-year, indicating a likely decline in the world cereal stocks-to-use ratio to 28.7%, slightly lower than the previous year but still a historically comfortable level.

FAO’s latest forecast for world cereal trade in 2021/22 stands at 481 million tonnes, up 0.4% from the previous marketing year and at a record high. This reflects expectations of a 2.0% increase in world wheat trade and an increase of almost 4.0% in the volume of rice traded globally, more than offsetting a contraction of 1.5% planned for coarse grains.

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