The FAO Food Price Index averaged 165.6 points in August, up 1.9% from July and up almost 7% from a year earlier. The monthly jump mostly was driven by cheese and palm oil quotations, while those for wheat, maize and rice all fell.
The FAO raised its world cereal production forecast for 2016 to 2.566 billion tonnes, up 22 million tonnes from July projections. FAO's Cereal Supply and Demand Brief attributed the increase primarily to anticipation of a record global wheat harvest this year and a large upward revision to this year's maize crop in the U.S.
The expected increase in grain output is forecast to boost inventories and push up the global stock-to-use ratio to 25.3%, an "even more comfortable (supply and demand) situation than predicted at the start of the season," the FAO said.
Coarse grain global output for 2016 should be around 1.329 billion tonnes, 2.1% higher than in 2015, buoyed by higher forecast maize output in several countries, especially the U.S.
The wheat output forecast also was raised to 741 million tonnes, driven by large upward revisions to projections for Australia, North America, India and Russia. Russia is poised to become the world's largest wheat exporter in 2016-17, overtaking the E.U., where wet weather has hampered this year's crops, according to the FAO.
Rice production also is expected to hit a new record this year at almost 496 million tonnes, owing to favorable weather conditions in much of Asia and on more U.S. farmers shifting to the crop as a result of its more attractive relative price, the FAO said.
The FAO did not materially change its forecast for world cereal utilization in the coming year, which is expected to grow by 1.6%, led by maize and to some extent lower-quality wheat supplies, used as animal feed. The FAO trade forecast for cereals in 2016-17 has been scaled up by almost 9 million tonnes on the back of abundant export availabilities of wheat and coarse grains, the FAO said.