ROME, ITALY – Global food prices rose slightly in September, as firmer prices of vegetable oils and to a lesser extent dairy products offset declining prices for staple cereal grains, according to the Food and Agriculture Organization of the United Nations (FAO) Food Price Index.

The FAO Food Price Index is a measure of the monthly change in international prices of a basket of food commodities.

The FAO Food Price Index averaged 178.4 points for the month of September, up 0.8% from August and marking a 4.3% increase from a year earlier.

The FAO Vegetable Oil Price Index increased by 4.6%, driven primarily by palm oil, although values for soy, rapeseed and sunflower oils also rose.

The FAO Cereal Price Index declined by 1%, as maize and wheat quotations fell in step with strong supply and harvest prospects. The FAO expects the current growing season to yield record worldwide cereals output.

The FAO updated its global cereal production forecast for 2017, raised to 2.612 billion tonnes, or almost 7 million tonnes above the record set in 2016, according to the Cereal Supply and Demand Brief.

world wheat map
September’s forecasts were raised on account of robust wheat production trends in the E.U. and the Russian Federation and expected maize outputs in China and the United States.

The FAO now forecasts 750.1 million tonnes of wheat to be harvested in 2017 and 1.361 billion tonnes of coarse grains, as well as 500.7 million tonnes of rice, slightly down from the previous forecast but close to last year's record output.

The FAO forecasts world cereal stocks by the close of season in 2018 to reach an all-time high of 720.5 million tonnes. That would take the stocks-to-use ratio of cereals — an indicator of the likely price direction — to 27%, well above the historical low of 20% registered exactly a decade ago. 

The ratio is even higher — 34.6% — for wheat due to significant inventory build-ups in China and Russia.

World trade in cereals is expected to rise slightly over the marketing year to reach 403 million tonnes, a new record, led by much larger maize imports by China, the E.U. and Iran. While Russia is set to consolidate its role as the world's largest wheat exporter, Argentina and Brazil are expected to be the main beneficiaries of the projected expansion in world trade in coarse grains.