Global crop production and ending stocks expected to rise: FAO, AMIS

The FAO Food Price Index remained steady in January and fell three percent from its January 2017 levels.

The Cereal Price Index rose almost 2.5 percent in January, reaching 6.3 percent above its year-earlier levels. The increase was driven mostly by wheat and maize prices; despite ample supplies, the price of these crops increase due to a weakening US dollar and concerns over weather. Strong demand from Asia also continued to drive up global rice prices in January.

The Vegetable Oils Price Index remained generally stable in January. While palm oil prices rose due to a combination of increased import demand and seasonal production declines in Southeast Asia, rapeseed and sunflower oil prices both fell.

The Dairy and Sugar Price Indices both declined in January, by 2.4 percent and 1.6 percent, respectively. Sugar prices have declined by as much as 30 percent from their January 2017 levels.

The latest AMIS Market Outlook forecasts ample supplies of wheat, maize, soybeans, and rice for the 2017-2018 season, with above-average or record crops in many producing countries leading to large ending stocks. The report also estimates that as a result, food price volatility on the global markets should remain stable overall. In addition, the 2018-2019 season is expected to see only modest declines in global wheat and maize production.

Global wheat production estimates for 2017 were increased in January, with increased production in Canada and Russia pushing total production closer to the 2016 record. Expected ending stocks also rose sharply in January due to revised forecasts from Russia and the EU.

Global maize production forecasts also rose in January due to revisions from China, the EU, and Mexico. Increases in anticipated feed use and industrial use in the EU and Mexico also drove up forecast utilization rates for 2017-2018. Maize global ending stocks for 2018 rose based on larger inventories in Brazil and China.

Global rice production for 2017-2018 increased due to a modest expected increase in China’s production. Higher-than-expected food consumption in Bangladesh and China will increase 2017-2018 utilization rates, but global 2018 ending stocks will still exceed 2017 levels.

Global soybean production estimates increased slightly in January due to increased forecasts for Brazil. While expected utilization rates also rose slightly, global consumption is likely to remain below average. Global 2017-2018 ending stocks rose based on revisions in Brazil and the US; however, global inventories are expected to decline from 2016-2017’s all-time high.