World food price index was stable in August
The Food and Agriculture Organization (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 per cent below its level in August 2017.
The FAO Cereal Price Index rose four per cent during the month, 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 over three per cent, while rice prices eased during the month.
The FAO Vegetable Oil Index declined 2.6 per cent from July, nearing a three-year low as palm, soy and sunflower oil quotations 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 per cent 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 per cent 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 pigmeat 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.
New forecasts for worldwide cereal production: FAO has now forecast global cereal production in 2018 to reach 2,587 million tonne, a small upward revision from July, but a three-year low and 2.4 per cent below last year's record high level.
The latest Cereal Supply and Demand Brief cut by a notable 14 million tonne the world wheat production forecast for this year, which now stands at almost 722 million tonne, the smallest crop since 2013. Dry and hot weather intensified yield reductions around Europe.
Worldwide production of coarse grains was revised up by 15 million tonnes since July, with improved outlooks for maize in China, Ukraine and the United States of America, more than offsetting expected output reductions in the European Union and the Russian Federation.
World rice production, meanwhile, is expected to rise 1.3 per cent from the previous year and reach a new record of almost 512 million tonne in 2018, buoyed by larger output recoveries in Bangladesh and Vietnam and stronger area rebounds in Sri Lanka and the United States.
FAO raised its forecast for world cereal utilisation to 2,648 million tonne, largely due to the greater use of maize for feed and industrial use and the robust rice harvest.
Cereal stocks are also being reduced, especially in China, the European Union and the Russian Federation, and the global cereal stock-to-use ratio is expected to slide to 27.3 per cent, a five-year low.