ROME, ITALY – For the first time in five months global food prices rose in October, as international estimates for cereals and sugar increased significantly, according to the Food and Agriculture Organization of the United Nations (FAO).
The FAO Food Price Index, averaged 172.7 points in October, some 1.7% higher than the previous month and 6% higher than during October 2018.
“The FAO Cereal Price Index rose by 4.2% during the month, as wheat and maize export prices moved up sharply on the back of reduced crop prospects in several major producing countries and robust trade activity,” the FAO said. “By contrast, rice prices slipped, driven by subdued demand and prospects of an abundant basmati harvest.”
The FAO Vegetable Oil Price index also rose, increasing 0.5% noting it reached its highest level in more than a year.
“Palm oil quotations nudged up by new biodiesel mandates in Indonesia as well as firm import demand and expected slowdown in output growth, while those for sunflower oil fell in the wake of bumper harvests in the Black Sea region,” the FAO said.
Due to reduced prospects of coarse grains and wheat the FAO lowered its forecast for global cereal production this year. Still, year-on-year, world cereal output is set to grow by 1.8% from 2018, according to the Cereal Supply and Demand Brief.
Worldwide FAO estimates coarse grain production in 2019 is expected to increase by 1.2% to 1.425 billion tonnes, while that of wheat is anticipated to grow by 4.5% to a record level of 765 million tonnes. The forecast for global rice production is pegged at 513.4 million tonnes, slightly below last year's level.
“Looking to 2020, rainfall shortages may hamper the sowing of crops, including wheat in the E.U. and maize in South America,” the FAO said. “The weather outlook is generally favorable for crop plantings in the Russian Federation and South Africa.”
According to the FAO, world cereal utilization in 2019-20 is forecast at 2.709 billion tonnes, a record high, while world cereal stocks by the end of the 2020 seasons are seen at 849.5 million tonnes, down 1.5% from their opening levels.
FAO said it anticipates the global cereal stock-to-use ratio declining to 30.4. It expects wheat inventories to rise, while those of maize and rice to decline.
World trade in cereals in 2019 is expected to rise 0.7% to 415 million tonnes.