World Food Price Index up 1.2% in November, up 25% year on year

FAO reported November’s world Food Price Index (FPI) up 1.2 percent from October’s FPI. Year to date, the 2021 FPI is up about 25 percent from 2020 and up 27 percent from the five-year average (adjusted for inflation). Year to date, the subindexes showing the most growth are oils (up 62 percent YOY), sugar (up 35 percent), and cereals (up 24 percent).

Year on year, the subindexes for November are showing double-digit growth, ranging from up 49 percent for vegetable oils to up nearly 26 percent for meat. These two same categories, however, did see marginal declines from October.

Vegetable oils prices remain elevated on strong palm oil values despite minor weakness for soybean and canola oils. Price-bullish concerns over actual and potential supply disruptions may be balancing with bearish concerns over demand growth and pressure from weaker energy prices.

After breaking a six-month rally in October, the sugar index rose again in November, coming in just below September’s value, the highest since early 2017. FAO attributes sugar price strength to market expectations that high ethanol prices will pressure Brazilian sugar production. While cheaper freight could support demand, strong production and exports from Southeast Asia should exert some pressure on prices.

Cereals has gained mostly steadily in the last four months, with FAO reporting resilient demand and tight stocks for wheat, also bolstering demand and prices for barley. Corn purchases have picked up for some regions, while demand for rice is steady.

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