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38. New Coronavirus Pandemic ー FAO May 2020 Food Price Trends

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The new coronavirus infectious disease (COVID-19) pandemic is causing a global economic downturn. While the grain market has sufficient inventories worldwide enough to avoid a critical price hike at this stage, still the international community needs to closely monitor policy changes by food exporters. (Pick Up 9, 24, 27).

The United Nations Food and Agriculture Organization (FAO) has published the Food Price Monitoring and Analysis (FPMA Bulletin Monthly Report) on the latest price trends at the global, regional, and national levels, providing a detailed information on the circumstances in countries where price increases are observed. Below is an overview of the May 2020 preliminary report.

In April 2020, in the Black Sea region, wheat export prices increased 7% compared to a month ago due to strong international demand amid export restrictions. In the US, it increased by 2% compared to March and 9% compared to the same period in 2019. In the United States, upward pressure has been somewhat limited due to a slower pace of exports, but strong shipments is pushing up prices in the EU and the Black Sea region.

In the case of maize, the benchmark price US maize fell 10% from the previous month, which is the lowest price for 10 years. Large global supply and good production prospects in South America are putting downward pressure on prices. In addition, sluggish demand for biofuels and livestock feed has also given further pressures on prices. Among the major exporters, Ukraine has relatively stable export prices, but large exports in early April have complemented the decline in foreign demand in late April.

In the case of rice, international prices increased due to temporary export restrictions by some exporting countries and stagnation of logistics. In April, FAO's All Rice Price Index (2002-2004 = 100) rose by 7%, marking the highest price since December 2011. At the end of March, Vietnam announced that it would suspend new exports, followed by Cambodia's report of a ban on exports and Myanmar's suspension of issuing new export licenses, leading to a sharp rise in Asian Indica rice prices in early April. Distribution restrictions due to quarantine in India and other countries put a further pressure on prices, but Vietnam finally settled down because the restrictions on exports were finally abolished from India and quarantine restrictions were lifted in India. In the United States, crop losses and strong exports have pushed the Indica price to the level since August 2013, but in major South American export countries, price increases are limited due to harvest and exchange trends.

References

FAO. Food Price and Monitoring Analysis. Accessed on May 13, 2020.

FAO. Food Price and Monitoring Analysis Bulletin #4. May 12, 2020.

Pick Up 9. New Coronavirus Pandemic ― Avoiding Export Control and Protectionism: Lessons from the 2008 World Food Crisis

Pick Up 24. New Coronavirus Pandemic ― World Bank Report: Implications of COVID-19 for Commodities

Pick Up 27. New Coronavirus Pandemic ― IFPRI Dashboard: Tracking the Impact of COVID-19 on the Global Food Market

 

Contributor: IIYAMA Miyuki (Research Strategy Office)