World Food Prices Ease in October

ROME - Nov 1/18 - SNS -- International food commodity prices dipped in October, as falling dairy, meat and vegetable oils prices more than offset a surge in sugar prices, according to the FAO Food Price Index.

The value of the basket it measures dropped 0.9% from September to average 163.5 points in October, down 7.4% from the same month the last year.

The FAO Cereal Price Index rebounded, rising 1.3% from September, mostly due to firmer maize quotations from the United States. Rice prices, by contrast, fell, partly influenced by currency movements weighing on Japonica and fragrant varieties.

Interestingly, gains in cereal grain values were matched by increases in the world export price index for pulses. The STAT index was up 6% on the month at 137.73 points, but still 16% below the same month last year. Problems swith Australian pulse crops offset underlying weakness in North American pulse markets.

The FAO Vegetable Oil Price Index fell by 1.5%, its ninth consecutive monthly drop, to reach its lowest level since April 2009. The latest slide was mostly driven by sluggish global import demand for palm oil and large inventories held by the commodity's major exporting countries. International soy oil prices increased slightly.

The FAO Dairy Price Index was responsible for the month over month drop in international food prices, sinking 4.8% from the previous month and 34% below the peak reached in February 2014. The weaker prices reflect increased export supplies across all major dairy products, especially from New Zealand.

The FAO Meat Price Index declined 2.0% from September, with ovine, pig, bovine and poultry meat all posting drops due mostly to abundant export supplies.

Bigger World Grain Harvest

FAO has also raised its forecast for global cereal production in 2018 to 2,601 million metric tons (MT), primarily due to higher estimates for wheat production in Canada and China. Nonetheless, the new forecast remains 2.1% below the record level achieved in 2017.

Global rice output this year is expected to surpass last year's all-time high by 1.3%, reaching 513 million MT, according to FAO's latest Cereal Supply and Demand Brief, also released today.

World wheat production in 2018 is now forecast at around 728 million MT, marking a 4.3% decline from the previous year. Winter wheat crops, to be harvested in 2019, are currently being sown in the Northern Hemisphere, while in the European Union, the United States and India generally remunerative prices are expected to stimulate an increase in plantings.

Worldwide output of coarse grains is forecast at 1 360 million MT, a 2.2% drop from 2017. Coarse grain crops are currently being planted in the Southern Hemisphere countries, and early prospects indicate an expansion in maize plantings in South America.

FAO expects world cereal utilization to rise by 0.2% to a record 2 653 million MT, spurred by higher feed and industrial uses of maize, especially in China and the United States. The use of wheat for food consumption is anticipated to rise by 1.0%, while that for rice to increase by 1.1%.

Worldwide cereal stocks at the close of seasons in 2019 are now forecast to reach almost 762 million MT, some 6.5% below their record-high opening level.

Total inventories of coarse grains are expected to fall for the first time in six years, while those of wheat are set to decrease by 4.5%, with drawdowns to be led by major exporters. World rice stocks, by contrast, are expected to rise by 2.6% to 176.6 million MT.