The FAO (UN’s Food and Agriculture Organisation) Food
Price Index dropped for the fourth month in a row in August reaching
its lowest level since June 2012.
The index, which measures the monthly change in the international prices of a basket of food commodities, averaged 201.8 points in August 2013, nearly 4 points (1.9 per cent) below its July value and 11 points (or 5.1 per cent) less than in August 2012.
Last month's decline was mainly driven by continued falls in the international prices of cereals and oils. Dairy, meat and sugar prices rose slightly.
Steep decline in cereal prices
The FAO Cereal Price Index averaged 210.9 points in August, down 16.4 points (7.2 per cent) from July and 49.4 points (or 19 per cent) from August 2012.
The steep decline reflects expectations for a strong growth in world cereal production this year and, especially, a sharp recovery in maize supplies.
Oils, dairy and meat
The FAO Oils/Fats Price Index averaged 185.5 points in August, 5.7 points (or 3.0 per cent) below the July value and the third consecutive monthly decline.
The FAO Dairy Price Index averaged 239.1 points in August, 2.8 points (1.2 per cent) more than in July and 37 per cent above its level in August last year. Prices increased last month for all the dairy products that make up the index, except butter, as export supplies remain limited in major trading countries.
The FAO Meat Price Index averaged 175.0 points in August, an increase of 2.2 points (1.3 per cent).
Bumper harvest expected
Together with the Food Price Index, FAO released a new forecast of world cereal production in 2013. This is expected to rise to 2 492 million tonne. The forecast has been revised upwards by 14 million tonne (or 0.5 per cent) from the July forecast as a result of higher maize crops officially reported in Argentina and improved prospects in the EU and Ukraine.
At the latest forecast level, global cereal production would be 179 million tonne (7.7 per cent) higher than in 2012 and a new record.
The recovery is predicted to be driven by 10.5 per cent expansion in coarse grain output to 1,285 million tonne as well as a 7.6 per cent rise in wheat production to 710 million tonne.
World rice production is set to increase by 1.3 per cent, reaching a new high of 497 million tonne, in milled equivalent.
US maize production bounces back
The sharp increase in global production of coarse grains in 2013 would be largely on account of a strong rebound in maize output (to 983 million tonne), the bulk of which would originate from the United States, where maize production is forecast to reach 343 million tonne this year, some 25 per cent (69 million tonne) higher than the 2012 drought-reduced level.
Cereal utilisation
Global cereal utilisation in 2013/14 is projected at 2,413 million tonne, down marginally from the previous forecast, but still 3.2 per cent higher than in 2012/13.
Based on the latest forecasts, total use of cereals for direct human consumption is set to expand by 1.2 per cent to 1,094 million tonne. This would result in global per capita cereal consumption remaining steady at just over 152 kg, with wheat at 67 kg and rice at close to 57 kg.
Cereal stocks
The forecast of world cereal stocks at the close of seasons in 2014 has been raised slightly since July, to 569 million tonne, primarily on expectations of higher maize inventories. The revised forecast puts world cereal stocks 13 per cent (65.5 million tonne) above their low opening levels and at their highest since 2001/02.
Based on the current projections of overall demand, the increase in stocks would drive up the global stock-to-use ratio to 23.3 per cent, the highest since 2002/03.
"The overall supply-demand situation for cereal markets is much improved over this time last year when drought-hit production and low stock-to-use ratios, especially for maize, raised serious concerns," said David Hallam, director of FAO's Trade and Markets Division. "Production is expected to rebound sharply and higher stock-to-use ratios should bring greater stability to world markets."
The index, which measures the monthly change in the international prices of a basket of food commodities, averaged 201.8 points in August 2013, nearly 4 points (1.9 per cent) below its July value and 11 points (or 5.1 per cent) less than in August 2012.
Last month's decline was mainly driven by continued falls in the international prices of cereals and oils. Dairy, meat and sugar prices rose slightly.
Steep decline in cereal prices
The FAO Cereal Price Index averaged 210.9 points in August, down 16.4 points (7.2 per cent) from July and 49.4 points (or 19 per cent) from August 2012.
The steep decline reflects expectations for a strong growth in world cereal production this year and, especially, a sharp recovery in maize supplies.
Oils, dairy and meat
The FAO Oils/Fats Price Index averaged 185.5 points in August, 5.7 points (or 3.0 per cent) below the July value and the third consecutive monthly decline.
The FAO Dairy Price Index averaged 239.1 points in August, 2.8 points (1.2 per cent) more than in July and 37 per cent above its level in August last year. Prices increased last month for all the dairy products that make up the index, except butter, as export supplies remain limited in major trading countries.
The FAO Meat Price Index averaged 175.0 points in August, an increase of 2.2 points (1.3 per cent).
Bumper harvest expected
Together with the Food Price Index, FAO released a new forecast of world cereal production in 2013. This is expected to rise to 2 492 million tonne. The forecast has been revised upwards by 14 million tonne (or 0.5 per cent) from the July forecast as a result of higher maize crops officially reported in Argentina and improved prospects in the EU and Ukraine.
At the latest forecast level, global cereal production would be 179 million tonne (7.7 per cent) higher than in 2012 and a new record.
The recovery is predicted to be driven by 10.5 per cent expansion in coarse grain output to 1,285 million tonne as well as a 7.6 per cent rise in wheat production to 710 million tonne.
World rice production is set to increase by 1.3 per cent, reaching a new high of 497 million tonne, in milled equivalent.
US maize production bounces back
The sharp increase in global production of coarse grains in 2013 would be largely on account of a strong rebound in maize output (to 983 million tonne), the bulk of which would originate from the United States, where maize production is forecast to reach 343 million tonne this year, some 25 per cent (69 million tonne) higher than the 2012 drought-reduced level.
Cereal utilisation
Global cereal utilisation in 2013/14 is projected at 2,413 million tonne, down marginally from the previous forecast, but still 3.2 per cent higher than in 2012/13.
Based on the latest forecasts, total use of cereals for direct human consumption is set to expand by 1.2 per cent to 1,094 million tonne. This would result in global per capita cereal consumption remaining steady at just over 152 kg, with wheat at 67 kg and rice at close to 57 kg.
Cereal stocks
The forecast of world cereal stocks at the close of seasons in 2014 has been raised slightly since July, to 569 million tonne, primarily on expectations of higher maize inventories. The revised forecast puts world cereal stocks 13 per cent (65.5 million tonne) above their low opening levels and at their highest since 2001/02.
Based on the current projections of overall demand, the increase in stocks would drive up the global stock-to-use ratio to 23.3 per cent, the highest since 2002/03.
"The overall supply-demand situation for cereal markets is much improved over this time last year when drought-hit production and low stock-to-use ratios, especially for maize, raised serious concerns," said David Hallam, director of FAO's Trade and Markets Division. "Production is expected to rebound sharply and higher stock-to-use ratios should bring greater stability to world markets."
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