Photo Credit: Dani Bradford/IFPRI

Global commodity prices fell slightly in October, according to the latest FAO Food Price Index. Although prices remained higher at 176.4 points than their September levels, the Index is 27 percent below the all-time high seen in February 2011.

The Vegetable Oil Index fell by 1.8 points from September. Soy oil prices drove much of this decline, falling due to improved harvest prospects in the US and ample global supplies for 2017-2018.

The Dairy, Meat, and Sugar Indices also fell in October based on generally higher supplies. For dairy products, this marks the first price decline since May 2017.

The Cereals Index was the exception in October, rising slightly from September and reaching 10.5 points higher than its October 2016 levels. Large exports from the Black Sea led wheat prices to decline, but maize and rice prices rose.

The latest AMIS Market Monitor was also recently released. This month’s report sees favorable market and supply prospects for wheat, maize, and soybeans in 2017-2018.
Wheat production forecasts for 2017 were raised this month based on revisions in Russia and the Ukraine; however, production remains below 2016 levels. Higher feed use has increased utilization forecasts, but total wheat ending stocks for 2017-2018 are anticipated to reach record highs.

Bumper maize crops in South America and South Africa drove 2017 production to an all-time high. Utilization expectations for 2017-2018 increased this month based on higher feed use. Global maize trade is also expected to reach a record high in 2017-2018, driven by strong demand in the EU, Mexico, and Asia. Increased production in South America and Africa will balance the increased use and keep total global ending stocks relatively steady.

Soybean and rice production expectations remained virtually unchanged this month. Rice utilization and trade for 2017-2018 are both expected to increase slightly, but rice ending stocks will decline marginally based on lower stocks expected in South Korea. Soybean utilization is expected to decline slightly but trade will rise based on higher expected exports from Canada to Asia, particularly China. Soybean ending stocks are expected to rise slightly, with supplies in China and Argentina outweighing declines in the US and Brazil.

The report also highlights that prospects for 2018-2019 will be heavily dependent on weather conditions in the coming months; in particular, soybean prices will be driven largely by weather and planting conditions in the southern hemisphere. La Niña conditions are likely to occur in November-February and could increase rainfall in Central America, the Caribbean, northern South America, Southern Africa, and Southeast Asia. Lower than average rainfall could occur in southwest Asia, the Horn of Africa, southeastern South America, and the southern US. These weather patterns will play an important role in planting and production in the upcoming season.

By: Sara Gustafson, IFPRI

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