World Food Prices Ease

ROME - Mar 5/20 - SNS -- Global food ingredient prices eased in February, mainly due to a harp drop in vegetable oils, partly driven by fears that the coronavirus (COVID-19) outbreak will slow global demand.

The FAO Food Price Index averaged 180.5 points in February, down 1.0% from the previous month but still 8.1% higher than a year earlier.

The FAO Vegetable Oil Index declined 10.3% from January, with international palm oil prices falling by even more on account of higher-than-expected output in Malaysia, a temporary drop in India's import demand and concerns over the spread of COVID-19.

The FAO Cereal Price Index declined 0.9% in February. Wheat prices were lower, reflecting well-supplied markets, while maize prices retreated as demand from the livestock feed sector dipped amid expectations of a weakening global economy. By contrast, international rice prices rose, buoyed by strong demand from Far Eastern and East African buyers.

STAT's global pulse index also eased in February, slipping 0.5% from January to average 150.23 points. This was largely due to easing prices in Australia and Canada, while the dry edible bean index in the United States advanced 3.9% on the month, averaging 175.23 in February, its highest level since August of 2013.

The FAO Meat Price Index was down by 2.0% from January, influenced by reduced imports by China impacted by delays in cargo handling in ports. Drought-induced slaughter in New Zealand exerted further pressure on ovine meat price quotations, while poultry meat prices were affected by lower imports by Asia.

The FAO Dairy Price Index rose 4.6%, led by surging price quotations for cheese, partly linked to reduced milk output in Australia. Milk powders, by contrast, dipped as logistical bottlenecks slowed purchases by China, the world's largest milk powder importer.

The FAO Sugar Price Index rose 4.5% amid prospects of lower production in India as well as in Thailand, combined with a strong global import demand.

World Output Rising

The FAO's Cereal Supply and Demand Brief, raising its estimates for 2019 world cereal production to 2,719 million metric tons (MT) due to higher maize outputs in West Africa and Ukraine.

The brief offers a preliminary forecast of 763 million MT for 2020 worldwide wheat production - very close to the near-record level of 2019 - and indicates that coarse grain output in 2020 will likely be strong in Argentina, Brazil and South Africa.

World cereal utilization in the 2019-20 cycle is now forecast to reach a record level of 2,721 million MT, driven by higher food, feed and industrial usages.

FAO raised its forecast for world cereal stocks at the close of the 2020 seasons to nearly 866 million MT, resulting in the global cereals stock-to-use ratio staying at a comfortable level of 30.9%.

FAO also forecasts world trade in cereals to rise by 2.3% to 420 million MT in 2019-20, the second-highest level on record, with wheat shipments accounting for more than half of the expected increase.