The latest edition of the FAO Food Price Index saw a continued, albeit marginal, decline in November. The 0.5-percent decline was driven largely by a fall in dairy prices, which offset rising sugar prices. The Index remains 2.3 percent above its November 2016 level.

The Cereal Price Index was virtually unchanged from October but remains 8.3 percent above its year-earlier level. Cereal prices, particularly wheat and maize prices, have stayed relatively steady since August 2017 due to a balanced supply-and-demand situation. Rice prices rose slightly in November due to stronger demand.

The Vegetable Oil Index rose 1.2 percent in November, reaching a nine-month high. Uncertainties regarding weather conditions and harvests in South America contributed to rising soy oil prices, as did reported below-average oil content in recently harvested soybeans in the US.

The Sugar Price Index rose by 9.2 percent in November, but this increase was balanced by a 4.9-percent fall in the Dairy Price Index. Meat prices remained virtually unchanged from October.

The latest edition of the AMIS Market Monitor was also recently released. The December report cites comfortable prospects for wheat, maize, soybeans, and rice for the 2017-2018 season. Similar to the FAO Food Price Index, the Market Monitor reports a generally balanced supply-and-demand situation for major cereal crops, which has kept prices relatively stable.

Wheat production is forecast up in 2017-2018, but the latest forecasts remain below the 2016-2017 record. Wheat utilization also rose in 2017-2018, but wheat trade is expected to be below the 2016-2017 peak due to lower import demand from China and India. Global wheat ending stock forecasts fell slightly this month but are still expected to reach record highs based due to high stocks in China and Russia.

Maize production prospects for 2017-2018 rose significantly in November based on upward revisions in Indonesia and the US. Maize utilization also increased due to higher feed use; while maize trade for 2017-2018 is expected to fall based on lower import demand from Vietnam, overall trade is still expected to surpass the record highs seen in 2016-2017. Global maize ending stocks rose in November; in the US, ending stocks could reach an all-time high.

Soybean production prospects for 2017-2018 fell slightly in November, with higher forecasts in Brazil only partially offsetting reduced prospects in Argentina. While higher utilization in China and Brazil increased utilization prospects slightly, overall global utilization for 2017-2018 is expected to be below average. Soybean trade is forecast to increase due to increased import demand from China and increased export availability from Brazil. Overall soybean ending stocks for 2017-2018 are reduced, however, following downward stock revisions from Argentina and Brazil.

Rice production for 2017-2018 was virtually unchanged in November. Reduced production in Madagascar and Bangladesh was offset by higher production in Myanmar, Pakistan, and the Philippines. Rice utilization for 2017-2018 is expected to fall slightly due to lower expected feed use in Asia, but overall rice trade is forecast to increase based on exports from China and Myanmar. Global rice ending stocks rose in November, due largely to increased stocks in Bangladesh, India, and Vietnam.

By: Sara Gustafson, IFPRI

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