World Grain, Oilseed Prices Drop in May
ROME - Jun 4/20 - SNS -- Global food prices dropped for the fourth consecutive month in May, as supplies appear strong and demand weakens due to economic contractions triggered by the COVID-19 pandemic, the Food and Agriculture Organization of the United Nations reported today.
The FAO Food Price Index, which tracks international prices of the most commonly-traded food commodities, averaged 162.5 points in May, 1.9% below the previous month and marking its lowest reading since December 2018.
The FAO Cereal Price Index declined 1.0% from April. International rice prices edged up slightly, buoyed by rising Japonica and Basmati quotations, while wheat export prices fell, amid expectations of ample global supplies. Coarse grain prices fell further, with U.S. maize prices now almost 16% below their level of May 2019.
The FAO Vegetable Oil Price Index fell 2.8% to a 10-month low. While quotations for rapeseed and sunflower oil prices increased, those for palm oil fell for the fourth consecutive month, reflecting subdued global import demand and higher-than-expected production and inventory levels in major exporting countries.
Global pulses did not follow the trends of grains and oilseeds. STAT's world export pulse price index advanced 2% over April to 154.8 points in May, up 11.5% over the same month last year. Gains were led by Canada, with its index averaging 149.91 in May, up 4.8% on the month and 19.4% higher than last year.
The FAO Dairy Price Index declined 7.3% from April, led by steep drops in the quotations for butter and cheese due to seasonal supply factors and lower import demand, and averaged 19.6% below its level one year ago. Quotations for milk powders declined only moderately, as low prices and renewed economic activity in China fueled strong buying interests.
The FAO Sugar Price Index bucked the trend, rising 7.4% from the previous month and undoing half of its April decline due to a rebound in international crude oil prices as well as lower-than-expected harvests in India and Thailand, respectively the world's second-largest sugar producer and second-largest exporter.
The FAO Meat Price Index declined by 0.8% in May, averaging 3.6% below its May 2019 value. Bovine meat quotations increased while those for poultry and pig meats continued to fall, reflecting high export availabilities in major producing countries, despite an increase in import demand in East Asia following the relaxation of COVID-19 social distancing measures.
Record Field Crops Expected
Global cereal production is on track to reach a new record level of 2,780 million metric tons (MT), 2.6% higher than 2019-20, The first forecasts for the 2020-21 season are based on conditions of crops already in the ground, planting expectations for those still to be sown and the assumption weather will be normal for the remainder of the season.
Maize or corn accounts for 90% of the predicted output increase of all cereals, with an expected expansion of 64.5 million MT to a total of 1,207 million MT, boosted by anticipated record harvests in North America and Ukraine and near-record harvests in South America.
ice production is seen reaching an all-time high of 508.7 million MT, up 1.6% from 2019, boosted by expected recoveries in China, Southeast Asia and South Asia as well as the United States of America.
Wheat output, by contrast, is forecast to decline from the solid level of 2019, as likely drops in the European Union, Ukraine and the U.S. more than offset expected increases in Australia and the Russian Federation.
World cereal utilization in the year ahead is also forecast to reach an all-time high, rising 1.6% to 2,732 million MT, as feed, food and industrial uses are all expected to expand. Maize is the primary driver, as its use for livestock feeding in China and for ethanol production in the U.S. are both foreseen increasing. Rice utilization in 2020-21 is forecast to expand by 1.6%, underpinned by ample supplies, with global per capita food intake rising 0.6% in the year to 53.9 kilograms.
Reflecting the new production and consumption forecasts, FAO now expects world cereal inventories by the end of national marketing seasons in 2021 to reach a new record of 927 million MT, a 4.5% increase from their already high opening levels. That would drive the global cereal stock-to-use ratio to 32.9%, a comfortably higher level than the 21.2% low registered in 2007-08. China is expected to hold 47% of global cereal stocks.
FAO expects world cereal trade in 2020-21 to rise by 2.2% to 433 million MT, setting a new record, with expansions expected for all major cereals, led by a 6.2% anticipated increase in the global trade in rice.
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