ROME, ITALY — The United Nation’s Food and Agricultural Organization’s (FAO) Food Price Index in November was virtually unchanged from its October level. At the new level of 215 points, the Index was 23 points, or 10%, below its peak in February 2011 but remained two points, or 1%, above its level in November 2010.
The prices of cereals, one of the main commodity groups included in the Food Price Index, dropped by 3 points or 1% from October. The retreat was largely driven by wheat prices, which dropped 3%, while rice quotations fell only slightly and coarse grain prices remained virtually unchanged. Nevertheless, the cereals index remained 6 points higher than in November 2010.
Contributing to the downward pressure on cereal prices is the significant upward revision of the 2011-12 global cereal supply estimate as a result of better crop prospects in some Asian countries and the Russian Federation, and larger than anticipated stocks in the latter. Other factors include deteriorating world economic prospects and a strong U.S. dollar.
These are among the highlights of the latest issue of FAO's quarterly Crop Prospects and Food Situation report published on Dec. 8. The report confirmed a record level of world cereal production of 2,323 million tonnes for 2011. Although marginally lower than October's estimate, this represents a 3.5% increase on 2010 production.
At this level, the 2011 cereal crop should be sufficient to cover the expected increase in utilization in 2011-12 and also allow for a moderate replenishment of world reserves, the report said.
Among cereals, global wheat output is expected to increase by 6.5%, while the forecasts for coarse grains and rice were reduced slightly due to a downward adjustment for maize in the U.S. and a deterioration of rice prospects in Indonesia.
Total cereal utilization in 2011-12 was forecast at 2,310 million tonnes, 1.8% higher than in 2010-11. An important feature is a sharp, 8% rise in the use of wheat for animal feed given its competitive price compared to coarse grains and maize in particular.
The forecast for world cereal ending stocks by the close of seasons in 2012 has been raised by almost 5 million tonnes since last month, to 511 million tonnes, the report said. At this level world cereal stocks would be 10 million tonnes higher than last year and the world cereal stocks-to-use ratio would increase slightly to 22%.