ROME, ITALY — A sudden surge in corn prices due to historically low planting levels in the United States contributed to an increase in global food prices in May, for the fifth consecutive month, the Food and Agriculture Organization (FAO) said on June 6.
The FAO Food Price Index, which tracks monthly changes in the international prices of commonly traded food commodities, averaged 172.4 points in May, up 1.2% from the previous month while still 1.9% below its level in May 2018.
The FAO Cereal Price Index rose 1.4%, entirely due to increases in corn price quotations in response to expected lowered production in the United States, where widespread flooding has plantings off to the slowest pace ever recorded.
Wheat prices generally dipped, while those of rice held broadly steady.
The FAO Vegetable Oil Price Index declined 1.1% as palm oil values declined on account of large inventory levels in leading exporting countries. Prices of soy, sunflower and rapeseed oils increased modestly.
The FAO’s latest forecast for world cereal production in 2019 — available in the Cereal Supply and Demand Brief, also published on June 6 — points to an increase of 1.2% from the previous year to reach 2.685 billion tonnes, a sharp downward revision from the forecast made in May when global cereal production was predicted to expand by 2.7%.
The year-on-year increase in global cereal production reflects expansions of wheat and barley production, while global rice output is likely to remain close to last year’s record level. Worldwide maize output, however, is now seen to fall, with U.S. production expected to shrink by 10% from the previous year amid a much reduced pace of plantings due to unfavorable weather conditions.
World cereal utilization in the year ahead is now forecast to reach 2.707 billion tonnes, down from the May forecast but still 1% higher than in 2018-19. Global rice utilization is predicted to reach 518 milllion tonnes, a 1.4% annual increase, while that of wheat is expected to grow 1.2%, reaching 755 million tonnes.
Based on the new estimates for production and utilization, world cereal stocks could decline by as much as 3% in the new season, hitting a four-year low of 830 million tonnes. The anticipated decline would result in the global cereal stock-to-use ratio dipping below 30%, which, nonetheless, still points to a relatively comfortable supply level, the FAO said.
World trade in cereals is forecast to rise to 414 million tonnes, up 1.4% from the estimated level for the previous year, led by a strong rebound in wheat trade driven by a stronger import demand by several countries in Africa and Asia, combined with expectations of large export availabilities in the Black Sea region and the European Union.