The new crown epidemic continues to rage in many countries around the world, and although there is hope for a return to economic production as countries gradually vaccinate more people, the recent spread of the mutated new crown virus in the United Kingdom has made it clear to governments that they cannot let down their guard. The Food and Agriculture Organization of the United Nations recently released a food price index showing that food prices, such as millet and corn, have continued to rise for several months. The large amount of food imports by the Chinese government starting in March 2020 has also raised concerns.
The epidemic is an uncertainty for economic development in the new year
The New Crown epidemic continues to rage in many countries around the world. Although the number of people who have been vaccinated since the end of December last year has gradually increased to give hope for the resumption of normal economic production, the spread of the mutated New Crown strain not long ago and the declaration of a state of emergency in Japan again due to the epidemic, as well as German Chancellor Angela Merkel’s recent statement that the number of people infected with the epidemic in the coming weeks will test countries, also make it clear that we cannot let down our guard and the New Crown pneumonia epidemic remains the biggest uncertainty affecting the economies of countries in 2021.
The new crown epidemic weighs heavily on the uncertainty of the future direction of the economy, making the purchase of food a means of reducing risk, with Le Monde pointing out that China’s massive purchases have led to continued high world food prices.
Food prices rise for the seventh consecutive month
The Food and Agriculture Organization of the United Nations recently published a food price index showing that the cereal price index for the year 2020 averaged 6.6% higher than in 2019. Export prices for wheat, corn, sorghum and rice continued to rise in December, partly due to concerns about growing conditions and harvest prospects for crops in North and South America and Russia, and partly related to large imports from China.
According to the French commodity market consulting firm (Agritel) survey, that is, last year China bought 30 million tons of corn from France, much higher than the estimated 7 million tons, in addition to France generally sold 200,000 tons of wheat to China annually, and in 2020 to 1.5 million tons, it is not known what specific reasons led China to buy grain in such large quantities?
The analysis points out that Russia’s wheat export tax increase and Argentina’s cessation of corn exports since last February may have led China to turn to other countries to buy large amounts of grain.
The current situation is that from the summer of 2020, world grain prices have been rising, such as wheat from 180 euros per tonne to 215 euros, corn rose by 18 % to 200 euros per tonne, and wheat, corn and other grain crops have become a safe haven for investors as countries enter difficult economic times and the dollar weaken at the same time.
Also driven by higher dairy and vegetable oil prices, global food prices continued to climb in December 2020, also the seventh consecutive month of increases and a three-year high.
The vegetable oil price index for the full year 2020 increased 19.1% from the previous year. Supply from major palm oil producing countries continues to be tight. In addition, international soybean oil prices were partially pushed up by the ongoing strike in Argentina, which affected the country’s crushing plants and port logistics.
The dairy product price index rose for the seventh consecutive month. Mainly due to concerns about drought and high temperature weather conditions affecting milk production in Oceania.
Also, in the meat price index, poultry offers picked up in January, especially as demand from the Middle East increased, while domestic sales in major producing countries also increased, in addition to the negative impact of the avian flu outbreak in European countries, including France, on the production of ducks and other poultry.
The sugar price index rose by 1.1% on average compared to 2019. The solid prices are driven by strong import demand from China.
FAO publishes a monthly food price index, which serves as a measure of international price changes for the most traded food commodities in the world.
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