In June 2019, the FAO Food Price Index fell a marginal 0.3 percent from May and was at a similar level as that seen in June 2018. This decrease was driven by the end of dairy and vegetable oil prices’ continuous rise of five months and balanced by a new surge in cereal, sugar, and meat prices.
The Cereal Price Index rose 6.7 percent from May 2019 due to the third consecutive monthly increase in maize export price quotations. Maize values also drove up the international wheat price in June after two months of declines. International rice prices have continued their steady increase due to strong global demand for Basmati rice and Thai Baht.
The Vegetable Oil Index reached its lowest level since December 2018, with a 1.6 percent decrease. This fall was primarily due to weakening palm and soybean oil prices. Low global import demand led to the decrease in palm oil prices, whereas low export prospects caused the decline in soybean oil prices.
The Dairy Price Index went down 11.9 percent from May 2019, falling for the first time after five consecutive months of price increases. This change came about because of the combination of increased export availabilities and weak import demand.
The Meat Price Index rose 1.5 percent as a result of strong import demand from East Asia.
The Sugar Price Index went up 4.2 percent from May, driven by the strengthening of the Brazilian currency against the US dollar.
While the latest edition of the AMIS Market Monitor points toward low 2019/20 maize production, it also predicts a well-supplied global soybean market. The report suggests that markets will continue to be largely shaped by trade disputes between the US and China.
FAO forecasts cereal trade in 2019/20 to increase by 2 percent. Large exports by Australia will increase the wheat trade by 3.9 percent. While coarse grains are expected to remain the same for the year, maize and rice trade is anticipated to go down. However, FAO forecasts the rice trade to rebound in 2020.
The FAO forecast for overall 2019 cereal production has remained nearly unchanged from the previous year’s levels, with only a 1.2 percent rise. The forecast for 2019 rice production remains virtually the same compared to 2018 levels, while maize production is predicted to be lower than the previous year due to abnormal rainfall in the US and diminished prospects from China and East and South Africa. Thus, the small change in overall cereal production seems to stem largely from increased wheat production (forecast 5.6 percent higher than 2018 levels), mostly from India. Additionally, wheat and rice utilization are expected to be around 1.5 percent higher in 2019/20, while growth of total consumption of coarse grains narrowed to a mere 0.6 percent due to low maize utilization, especially in Brazil and Mexico.
The world cereal stock forecast for the closing seasons in 2020 is below its opening level by 3.2 percent, mostly due to low maize production. Maize inventory is expected to decrease considerably by 12.4 percent; as a result, the world’s total coarse grain stock is also expected to go down by 9.1 percent. Global rice stocks are expected to go down by 1.1 percent, while global wheat stocks are expected to increase by 4.5 percent.