Global Food Prices Eased in August



ROME - Aug 6/19 - SNS -- Prices for the world's major food commodities fell in August because of sharply lower values for staple cereals and sugar, according to the Food and Agriculture Organization of the United Nations.

The FAO Food Price Index, which tracks monthly changes in the international prices of commonly traded food commodities, averaged 169.8 points in August 2019, down 1.1% from July while still up 1.1% from its August 2018 level.

Global markets for pulses were also lower in August, with the STAT price index dropping 1.6% on the month to average 135.4. However this was up 4.3% from the same month last year.

Interesting the U.S. pulse price index averaged 116.7 in August, up 1.2% from July and up 0.7% from last year. By contrast, the Canadian index was down 4% on the month at 121.6, which was 0.6% below August of 2018.

The FAO Cereal Price Index declined by 6.4% from the previous month. Maize values turned sharply lower due to expectations of a much larger than previously anticipated harvest in the United States of America, the world's largest maize producer and exporter. Wheat prices also remained under downward pressure, reflecting ample export availabilities, but those of rice edged up, due to seasonal effects as well as concerns over the impact of weather on crops in Thailand.

The FAO Sugar Price Index was down 4.0% from July, due largely to the weakening of the Brazilian real, as well as prospects of larger shipments by India and Mexico.

By contrast, the FAO Vegetable Oil Index rose by 5.9% in August, hitting an 11-month high amid a rebound in global import demand for palm oil as well as unfavorable weather conditions in Indonesia's major growing regions. Soy oil prices also rose, driven in part by lower than anticipated crush volumes in North America.

The August FAO Meat Price Index rose by 0.5%, now up 12.3% from its value at the beginning of the year. The increase reflected higher international price quotations for pigmeat, underpinned by strong import demand from China, where the African Swine Fewer has curtailed domestic production.

The FAO Dairy Price Index rose by 0.5% from its July level, reversing sharp falls registered in the previous two months, as price quotations rose for cheese, Skim Milk Powder and Whole Milk Powder.


FAO Raises Grain Output Forecast

FAO also released a new Cereal Supply and Demand Brief, raising its July forecast for global cereal output by 22 million metric tons (MT) to 2,708 million MT, 2.1% above the 2018 outturn.

The revisions mostly reflect improved expectations for U.S. maize production. Meanwhile, FAO lowered its estimate for global wheat output in 2019 due to reduced crop productivity in the European Union and the Russian Federation, but it is still expected to be 5.0% higher than in 2018. The forecast for worldwide rice production has been revised up from July to 517 million MT, at par with last year's record level, driven by increases in China and the United States.

World cereal utilization for the year ahead is expected to hit a new record of 2,715 million MT, buoyed by rice consumption hitting an all-time high of 519 million MT, translating into a 0.5 kilogram per capita increase from the previous year. Utilization forecasts for wheat, maize and barley were also raised.

The stronger harvest prospects point to world cereal stocks reaching 847 million MT by the close of seasons in 2020, which, however, would remain around 16 million MT below their opening levels. Maize inventories are expected to accumulate sharply in the United States, while China's wheat stocks are currently set to expand by 7.9% and reach an all-time high.

FAO left unchanged its forecast for world trade in cereals at nearly 415 million MT, as expected increases in wheat and rice trade offset reduced trade prospects for maize and sorghum.