Meanwhile, a companion monthly report, the FAO Cereal Supply and Demand Brief, shows the outlook for the global cereal supply in the 2014-15 marketing season has improved considerably since the previous report in May.
The Food Price Index, based on the prices of a basket of internationally-traded food commodities, averaged 207.8 points in May 2014, down 2.5 points (or 1.2%) from April, and nearly 7 points, or 3.2%, below the May 2013 level.
The Index had risen to a 10-month high of 213 points in March, but fell in April and May amid lower dairy, cereal and vegetable oil prices. Sugar prices went against the trend, making strong gains in May, while meat remained firm.
The FAO Cereal Price Index averaged 204.4 points in May, down 2.4 points (or 1.2%) from April and 30 points (or 13%) below last year. The decline in May was mostly triggered by maize prices, which fell in response to favorable growing conditions and good supply prospects in 2014-15. Wheat prices, which had contributed to price increases in previous months, partly amid fears of disruptions to trade flows from Ukraine, also fell, while rice prices saw little change.
"We went into May with concerns over unfavorable weather conditions, especially in the U.S., and geopolitical tensions in the Black Sea region, but towards the second half of May, we began to see lower wheat prices following improved weather conditions and the continuation of regular shipping patterns from the Ukraine,” said FAO Senior Economist Abdolreza Abbassian.
FAO's monthly update on the world cereal market, the Cereal Supply and Demand Brief, puts world cereal production in 2014 at nearly 2.48 billion tonnes (including rice in milled terms), almost 1% (21.5 million tonnes) higher than was reported in May, though still 1.4% down from 2013.
Global production of coarse grains stands at 1.274 billion tonnes, 18.6 million tonnes higher than reported in May, with most of the upward adjustment reflecting improved outlook for maize crops in the United States and bigger than earlier anticipated maize harvests in Argentina and Brazil.
World wheat production in 2014 is forecast at nearly 703 million tonnes, up marginally from the May forecast, though down from the previous year. Rice production in 2014 is expected to reach about 503 million tonnes (milled basis), 1.9 million more than foreseen last month, and 1.2% more than in 2013.