World Food Prices Decline in June
ROME - Jul 5/18 - SNS -- International agricultural food commodity prices fell in June for the first time in 2018, as trade tensions affected markets even with global production prospects down, reports the FAO.
The FAO Food Price Index averaged 173.7 points in June, down 1.3% from its level in May. The decline was driven primarily by lower benchmark price quotations for wheat, maize and vegetable oils including those made from soybeans.
The FAO Cereal Price Index dropped 3.7% in the month. Despite overall worsening production prospects for the main grains, there were "relatively sharp falls" in international maize and wheat prices, reflecting heightened trade tensions. Rice prices increased.
The FAO Vegetable Oil Price Index declined 3.0% from May to reach a 29-month low. Palm, soybean and sunflower oil prices all declined. Heightened trade tensions between the United States of America and its trading partners, particularly China, weighed particularly hard on the US origin export prices, led by soybeans, with the strength of the dollar exerting further downward pressure.
The FAO Dairy Price Index dropped 0.9% as lower price quotations for cheese more than offsetting a rise in Skim Milk Powder prices. Values were affected by greater export availabilities in the European Union and the United States.
The FAO Meat Price Index inched up 0.3% from May, led by an upswing in ovine and pig meat values.
The FAO Sugar Price Index rose 1.2%, reversing six consecutive monthly declines, due mostly to concerns that dry weather in Brazil, the world's largest sugar producing and exporting country, would negatively affect sugarcane yields and production.
International markets for pulses were mixed in June. The STAT world pulse priced index was up 1% on the month, averaging 135.66, but down 24% from the June of last year. The Canada pulse index was down 4% on the month at an average 134.4, down 26% from the same month last year.
Cereal Output Dropping
FAO also updated its forecast for world cereal output this year, now pegged at 2,586 million metric tons (MT), which is 64.5 million MT or 2.4% less than the record production of 2017. World cereal utilization is forecast to rise to 2,641 million MT in 2018/19.
As utilization is foreseen to outpace new production, global cereal stocks accumulated over the past five seasons will have to be drawn down, by around 7% from their season-opening levels. This should result in the world stocks-to-use ratio for cereals dropping to 27.7%, representing the first decrease in four years -- down from 30.6% -- although still well above the record low of 20.4% registered in the 2007/08 season.
The inventory drawdown is expected to be largest for maize, while rice stocks may increase for the third year in a row.
World trade in cereals is expected to remain generally robust also in 2018-19, close to near-record level of 2017-18.