The FAO Food Price Index continued its decline for the third month in a row, falling by 1.8 percent in April. The prices of all commodities covered by the Index declined in April, with the exception of meat; however, the Index remains 10 percent higher than its April 2016 level.
The Cereal Price Index fell 1.2 percent in April, driven by favorable cereal production prospects and strong export competition. The decline was particularly strong for wheat; rice prices, on the other hand, rose slightly in April due to increased demand. Overall, the Cereal Index fell 2.5 percent below its April 2016 level.
The Vegetable Oil Price Index fell by 3.9 percent in April, reaching a nine-month low. Palm oil prices declined to their lowest level since July 2016, driven by good production prospects in Southeast Asia and weak global import demand. Falling soy oil prices were driven by reports of a bumper harvest in South America and forecasts of record-high plantings in the United States.
The Dairy Price Index and Sugar Price Index fell 3.3 and 9.1 percent in April, respectively. Ample supplies and weak import demand drove the reductions. The Meat Price Index was the only Index that increased in April, rising 1.7 percent due in part to strengthened demand for pig meat from the EU, China, and the Republic of Korea.
The latest AMIS Market Monitor Report forecasts a comfortable supply situation for all four covered commodities (wheat, soy, rice, and maize) in 2017-2018.
Global wheat production is expected to dip below the record highs seen in 2016 due to smaller crops in Australia, Canada, Russia, and the US. However, global 2018 wheat ending stocks are still expected to be the second highest on record.
AMIS reports global maize production for 2017 to be 1.3 percent higher than 2016 due to bumper crops in major producing areas in the southern hemisphere. An expansion in feed use in China and South America will increase maize utilization in 2017, but expected global 2018 ending stocks increased by 7.6 million tonnes in April.
Expectations for 2016-2017 soybean production increased in April as well, with better-than-expected yields in Brazil and Bolivia increasing total expected production by 3.6 million tonnes. Anticipated soybean ending stocks also increased this month due to improved production forecasts for Brazil, China, and the US; AMIS is now expecting a 17 percent year-on-year increase in global soybean inventories.
Rice production prospects remained stable in April; increased production in Brazil, China, India, and Indonesia is expected to increase global 2017 yields by 0.9 percent. Rice utilization is expected to grow by 1.8 percent, and global 2018 ending stocks are anticipated to fall slightly due to adjusted expectations for inventories in Bangladesh and the US.
By: Sara Gustafson, IFPRI