Photo Credit: Neil Palmer/CIAT

The latest editions of the FAO Food Price Index and the AMIS Market Monitor were recently released. The FAO Food Price Index is a measure of the monthly change in international prices of a basket of five food commodity groups; the monthly AMIS Market Monitor covers the international markets for wheat, rice, maize, and soybeans, providing an overview of the market situation and outlook for each of these crops.

The Food Price Index rose 2.2 percent in May and is up 10 percent from its May 2016 level. May’s increase followed three months of consecutive declines.

The Cereal Price Index is still 2.9 percent below its value of May 2016, but increased 1.4 percent since April. Weather developments and stronger trade activity underpinned wheat export prices, while a strong demand for higher quality rice drove up international rice prices for the sixth consecutive month.

The Vegetable Oil Price Index also rose in May, averaging 168.7 points after three consecutive months of decline. This reversal reflects rising palm and soy oil prices. In both the global and US markets, unusually strong demand outweighed the price-depressing effect of anticipated improvements in global supplies.

The Dairy Price Index is up as much as 51 percent from May 2016. However, the index is still 30 percent below its peak in February 2014. Quotations of all the dairy products that compose the index rose in May. The Meat Price Index also rose by 2.5 points from April, continuing the trend of modest price increases observed since the beginning of the year. Pig, bovine and ovine meat all rose and those for poultry were stable.

The Sugar Price Index is down 5.4 points from April, marking a 13-month low. Higher-than-expected sugar output in Brazil’s center-south region, combined with the sudden slide of the Brazilian Real, discouraged use of sugar in the domestic market in favor of more lucrative sugar for export. In addition, China’s decision to impose high duties on imports beyond its WTO tariff-rate quota has also impacted international sugar prices.

The latest edition of the AMIS Market Monitor highlights another comfortable season in 2017-2018. Although world wheat production is forecasted to fall below the 2016 record, wheat markets should remain adequately supplied. Maize markets have seen a record crop this year, and rice supplies should remain ample even though reserves held by the major exporters may fall to a 10-year low. Early indications suggest a small drop in the production of soybeans, but large carryover stocks and ample export availabilities should provide a buffer against the projected fall in production.

Wheat production is down due to adverse weather that affected some primary growing regions within the US, Europe, China, Canada, and Ukraine. Although trade in 2017-2018 has risen slightly, it is still falling short of the 2016-2017 record high volume. Utilization lowered mostly on revisions to China’s historical feed use estimates, as well as the forecast for 2017-2018. Stocks lifted sharply due to significant upward revisions in China, which more than offset downward adjustments in the US.

Corn production prospects increased due to bumper crops in the southern hemisphere and anticipated larger crops in South Africa, pushing up world output to a record level. Utilization expectations lowered to reflect adjustments to feed forecasts for China and Indonesia, but are still projected to increase 1.9 percent. Trade forecast is slightly higher due to import demands by several countries, and stocks are in less decline because of upward revisions to inventories of Argentina, Brazil, Canada, and China.

Rice production downgraded on less buoyant prospects for Bangladesh and China and on a larger-than-anticipated reduction in Sri Lanka. In China and the US, there is some concern over production due to heavy rainfall and flooding. Overall use is up by 1.2 percent, sustained by growing food needs. Trade should expand modestly, as import gains in West Africa and the Near East are partly outweighed by cuts in the Far East. Stocks are little changed.

Soybean production is on the rise due to confirmation of record yields in Brazil and Argentina. However, global production could slip 1.6 percent from the record peak in 2016-2017, assuming a return to trend yields in the US and South America. Global utilization should continue to expand, driven by China, Brazil, and the US. Trade may also rise further stimulated by firm Asian import demand and ample exports available in the US and South America. Global stocks could contract by almost 10 percent from the current season’s all-time high.

By: Jenn Campus

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