ROME, ITALY — A rebound in cereal prices helped the United Nation’s Food and Agriculture Organization’s (FAO) August Food Price Index hold steady in August.
The monthly index averaged 167.6 points, essentially unchanged from the revised estimate for July and 5.4% below a year ago.
The FAO Cereal Price Index rose 4% during the month, with wheat prices rising twice as much due to deteriorating crop prospects in the E.U. and Russia. International maize quotations rose by more than 3% while rice prices eased during the month.
The FAO Vegetable Oil Index declined 2.6% from July, nearing a three-year low as palm, soy and sunflower oil quotations all fell amid favorable production trends and, in the case of palm oil, weak global import demand.
The FAO now forecasts global cereal production in 2018 to reach 2.587 billion tonnes, 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 cut by a notable 14 million tonnes the world wheat production forecast for this year, which now stands at almost 722 million tonnes, 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 tonnes since July, with improved outlooks for maize in China, Ukraine and the United States more than offsetting expected output reductions in the E.U. and Russia.
The FAO now expects 2018 coarse grain output to be nearly 1.354 billion tonnes, some 2.6% below the level of 2017.
World rice production, meanwhile, is expected to rise 1.3% from the previous year and reach a new record of almost 512 million tonnes in 2018, buoyed by larger output recoveries in Bangladesh and Viet Nam and stronger area rebounds in Sri Lanka and the United States.
The FAO raised its forecast for world cereal utilization to 2.648 billion tonnes, largely due to greater use of maize for feed and industrial use and the robust rice harvest.