Photo Credit: Leonora Enking

The FAO Food Price Index, released today, fell slightly in November but remains 10.4 percent higher than its November 2015 level. This month's small decline, driven mostly by falling oil prices, interrupted the rising trend seen since the start of 2016.

The Cereal Price Index fell 0.6 percent in November and is as much as 12 points below its year-earlier level. Good global supply prospects, particularly for wheat in Argentina and Australia, have supported this decrease.

The Vegetable Oil Price Index increased 4.5 percent in November, reaching its highest level since August 2014. Lower-than-expected palm oil production in Southeast Asia drove up palm oil prices, while strong global import demand strengthened soyoil prices. Expected increasing demands for oilseeds from the biodiesel sector also contributed to this month's increase.

The Sugar Price Index saw the largest change in November, falling 8.9 percent. This marks the Index's first decline in six months and is largely attributable to a weakened Brazilian Real. Combined with a larger-than-expected harvest in Brazil's major sugar-producing region, this weakening of the currency increased the country's sugar exports.

The Dairy Price Index rose 1.9 percent in November, while the Meat Price Index remained essentially unchanged.

The latest AMIS Market Monitor was also released this week. The report forecasts that the positive supply trends for wheat, maize, rice, and soybeans seen throughout 2016 are likely to continue into 2017. In addition, provided there are no major setbacks in production, the global price of these crops is expected to remain stable in the coming months as well.

Wheat production increased in 2016, and wheat utilization in 2016-2017 is expected to increase by 2.8 percent based on growth in global feed use. Wheat trade for 2016-2017 is expected to be largely unchanged, and global wheat ending stocks are anticipated to be higher due to higher-than-expected inventories in the CIS and Iran.

Increased maize production in the US in 2016 offset lower production in India, leading to a global increase in production. Maize utilization in 2016-2017 is expected to increase by 2.4 percent thanks to increased use of the crop for animal feed in China and the US. Trade in 2016-2017 is forecast to contract due to decreased import demand from China and several Central American countries, and maize ending stocks are expected to increase thanks to a record build-up in the US.

Global rice production in 2016 also grew due to increased production in Bangladesh and Mali. Expectations for 2016-2017 rice utilization remain generally unchanged, and trade is expected to fall in 2016-2017 thanks to lower purchases by China. Global rice ending stocks are forecast to remain steady.

Global soybean production in 2016 rose by 3 MT thanks to record harvests in the US and smaller upward revisions in the EU, Canada, and China. Soybean utilization for 2016-2017 is forecast to rise by around 5 percent from the previous year's levels, and global consumption is expected to be below global production. This means that soybean ending stocks should increase by around 3.6 MT, matching the record-high seen in 2015-2016. Soybean trade is expected to be slightly higher than the previous year's levels thanks to
increased import demand from China and the EU and increased export predictions for the US and Canada.

By: Sara Gustafson, IFPRI

Post new comment
The content of this field is kept private and will not be shown publicly.
Share