In view of the many uncertainties regarding the COVID-19 pandemic, the AMIS Secretariat Steering Committee convened a virtual extraordinary meeting on 19 March to discuss possible implications for global food markets.

While previous crisis situations of global food markets have usually been triggered by supply tightness, the AMIS Secretariat confirmed that current food supplies (of cereals in particular) are regarded as sufficient to meet anticipated demand. However, the pandemic might seriously threaten food security at local level, especially in vulnerable countries.

Regarding market developments of the four AMIS commodities:

• Wheat prices have generally been under downward pressure, already prior to the global spread of the coronavirus. The production outlook for 2020 remains favourable despite possible significant year-on-year declines in some countries (e.g. UK and the Ukraine). Most recently, wheat prices have started to increase, mainly because of a faster pace of wheat purchases from world markets, possibly fueled by concerns over the possible imposition of export restrictions by countries facing a rise in their domestic food inflation. Under normal market conditions rising stocks or inventories could have a bearish impact on prices. However, in view of current uncertainties it could have the opposite effect as some countries may accelerate their foreign purchases to build bigger reserves in anticipation of an aggravating currency situation or serious disruptions in deliveries and domestic distribution.
• The situation for maize is very different from wheat. Maize prices were relatively stable before the crisis but started to fall sharply with the slide in oil prices as well as the global economic slowdown. Lower oil prices negatively impact demand for maize, especially in the US where one third of domestic maize production is used for the production of fuel ethanol. In addition, a stronger dollar, as is now the case, weighs heavily on export competitiveness of US maize at a time when large export supplies are available from cheaper origins in South America.
• Global soybean prices are also under downward pressure, mostly due to large production in Brazil and a weakened Brazilian currency, and turmoil in energy markets, similar to the situation of maize. The expectation that the US crop will recover in 2020 is also seen to contribute to weaker prices in US futures. In addition, concerns over the impact of the coronavirus crisis on demand and a possible world-wide recession are expected to keep soybean markets under pressure.
• As for rice prices, these have been on the rise since December 2019, even though price movements have not been homogenous. In the Indica market, the sole segment to have seen prices strengthen in recent months, gains have most notably concerned Thai and US prices, in both cases reflecting tighter exportable availabilities due to production shortfalls endured this season. This has encouraged buyers to turn to competing origins, such as Pakistan and Viet Nam, where prices have risen as a result, albeit less sharply than those of Thailand. Underscoring the diverging trends witnessed in the rice market in recent months, quotations in India, the world’s largest rice exporter, have actually softened, indicative of its ample rice availabilities and tepid global import demand. Policy responses to the coronavirus crisis have so far mostly focused on averting panic buying and ensuing upward pressure on domestic quotations, including by issuing reassurances to consumers that supplies in local stockpiles were sufficient to meet immediate consumption needs.