The FAO Food Price Index averaged 151.8 points in April, a 0.7% increase from March, the Food and Agriculture Organization of the United Nations (FAO) said on May 5.
The gradual increase is far from even across the board. April's increase was driven by palm oil prices and, in a minor key, cereals, while sugar prices tapered down after a strong increase in March.
The FAO Food Price Index is a trade-weighted index tracking international market prices for five key commodity groups: major cereals, vegetable oils, dairy, meat and sugar. Its decline over the past year reflects ample food supplies, a slowing global economy and a stronger U.S. dollar.
The FAO Cereal Price Index rose 1.5% on the month, due primarily to international maize quotations, themselves influenced by a weaker U.S. dollar and spillover from the oilseeds complex. However, rice prices declined marginally, while wheat markets posted limited gains amid expectations of large supplies in the new season for the crop.
FAO raised its forecast for world cereal production in 2016 slightly to nearly 2.526 billion 2.526 billion tonnes, virtually the same as in 2015 and potentially on course to be the second-largest global harvest ever, according to FAO's Cereal Supply and Demand Brief, released on May 5.
The larger figure results almost entirely from improved prospects for wheat production, as winter weather conditions have been favorable for prospective yields in the E.U., the Russian Federation and Ukraine. At 717 million tonnes, the 2016 wheat output forecast remains 16 million tonnes short of last year's record.
FAO's new production forecast for global coarse grains - including barley, maize, millet, oats, rye and sorghum - stands at 1.314 billion tonnes, about 1% above the 2015 output.
FAO left unchanged its worldwide rice production forecast at 495 million tonnes, about 1% higher than the previous year, although the full impact of the El Niño weather phenomenon will not be clear for a few more months.
World cereal utilization in the season ahead is expected to rise by only 1.1% due to slower growth in the use of cereals - especially wheat and barley – as livestock feed.
As a result, world cereal stocks are likely to drop by 3.3% or 21 million tonnes over the course of the new season. Stocks are forecast to drop most in Brazil, Thailand, India, China, Morocco, Iran, Argentina and South Africa, according to FAO.
World trade in cereals is expected to decline slightly, to 367 million tonnes, with sharp drops in China's imports of barley and sorghum as well as E.U. imports of maize, more than offsetting soaring imports of maize by drought-stricken countries in southern Africa.