FAO: Food prices ease but stay high in April

by World Grain Staff
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ROME, ITALY — Global food prices measured by the United Nation’s Food and Agricultural Organization’s (FAO) Food Price Index fell three points or 1.4% from March to April 2012 but seem to have stabilized at a relatively high level of 214 points, FAO said on May 3.

The fall was the first after three consecutive months of increases, and although the index is significantly down from its record level of 235 points in April 2011, it is still well above the figures of under 200 which preceded the 2008 food crisis.

The index was published in the latest FAO Food Outlook, a global market analysis which comes out twice a year. It noted that the prospects for the second half of this year and into the next indicate generally improved supplies and continuing strong demand.

Consequently, the global food import bill in 2012 could decline to $1.24 trillion, down slightly from last year’s record of $1.29 trillion, Food Outlook said.

The forecast for cereals production was for a modest expansion in 2012 to a new record of 2.371 billion tonnes, compared to 2.344 billion tonnes in 2011.

However, within the cereals sector, wheat production in 2012 is anticipated to fall by 3.6% compared to 2011, to 675 million tonnes, with the largest declines forecast for Ukraine, followed by Kazakhstan, China, Morocco and the E.U. The expected decrease coincides with prospects of a slight reduction in total wheat utilization in the 2012-13 marketing season.

Lower wheat output is offset by a record coarse grains production of 1.207 billion tonnes anticipated in 2012, compared to 1.164 billion tonnes in 2011 – itself a record year.  But the increase, expected to follow a sharp rise in plantings in the U.S., is unlikely to be sufficient to ease current market tightness because of the very low level of opening stocks, with consequent, continuing pressure on prices.

Rice production is expected to grow 1.7% in 2012 to 488 million tonnes, but slackening import demand and the return of India as a major exporter are keeping prices down. World rice production this year is expected to exceed demand for the eighth consecutive year.

After two seasons of relatively ample supplies, in 2011-12 the market for oilseeds and derived products is set to tighten again. Global oilcrop production will not be sufficient to satisfy growing demand for oils and meals. Global soybean production is estimated to decrease by almost 10%, one of the steepest year-on-year falls on record. With oilcrops other than soybeans only partly compensating for the shortfall, total oilcrop production should drop to a three-year low, down 4% from last season. International prices for oilcrops and derived products, which have risen sharply since January, are therefore likely to stay firm.

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