The FAO Food Price Index remained stable in August, as cereal prices rebounded while vegetable oils and sugar declined.

The monthly index, released, averaged 167,6 points in August, virtually unchanged from its revised estimate for July and 5,4% below its level in August 2017.

The FAO Cereal Price Index rose 4,0% during the month of August, with wheat prices rising twice as much due to deteriorating crop prospects in the European Union (EU) and the Russian Federation. International maize quotations rose by more than 3,0% while rice prices eased during the month.

The FAO Vegetable Oil Index declined 2,6% from July, nearing a three-year low as palm, soya and sunflower oil quotations all fell amid favourable production trends and, in the case of palm oil, weak global import demand.

The FAO Dairy Price Index posted its third consecutive monthly decline in August, falling 1,5% amid relatively thin seasonal volumes. While droughts may adversely affect milk production growth in parts of Europe and Australia, New Zealand’s output prospects are improving.

The FAO Sugar Price Index dropped 5,4% from July to reach the lowest level in a decade, due largely to the continued depreciations of the currencies of major exporters, Brazil and India.

The FAO Meat Price Index was broadly unchanged on the month, as pig meat and ovine meat quotations rose on strong import interests from China, offsetting declining poultry and bovine meat prices, with the latter under pressure by high export availabilities from the United States of America (USA).

New forecasts for worldwide cereal production

FAO now forecasts global cereal production in 2018 to reach 2 587 million tons, a small upward revision from July but a three-year low and 2,4% below last year’s record high level.

The latest Cereal Supply and Demand Brief, also released today, cut by a notable 14 million tons the world wheat production forecast for this year, now stands at almost 722 million tons, the smallest crop since 2013. Dry and hot weather intensified yield reductions around Europe.

On the other hand, worldwide production of coarse grains was revised up by 15 million tons since July, with improved outlooks for maize in China, Ukraine and the USA, more than offsetting expected output reductions in the EU and the Russian Federation. FAO now expects the 2018 coarse grain output to be nearly 1 354 million tons, some 2,6% below the level of 2017.

World rice production is expected to rise 1,3% from the previous year and reach a new record of almost 512 million tons in 2018, buoyed by larger output recoveries in Bangladesh and Vietnam and stronger area rebounds in Sri Lanka and the USA.

FAO raised its forecast for world cereal utilisation to 2 648 million tons, largely due to greater use of maize for feed and industrial use and the robust rice harvest.

Cereal stocks are also being reduced, especially in China, the EU and the Russian Federation, and the global cereal stock-to-use ratio is expected to slide to 27,3%, a five-year low.

The forecast for world trade in cereals over the 2018/2019 season has been revised up to nearly 414 million tons, about 1,5% below the previous year’s record high. – FAO