The latest editions of the FAO Food Price Index and AMIS Market Monitor were both released on October 6. The FAO Food Price Index is a measure of the monthly change in international prices of a basket of five food commodity groups, while the AMIS Market Monitor covers the international markets for wheat, rice, maize, and soy and provides an overview of the market situation and outlook for each of these crops.

The September FAO Food Price Index increased by almost 5 points (2.9 percent) from August to 170.9 points, reaching a 16-month high. This is also 10 percent higher than the September 2015 Index. This month’s increase was predominantly driven by significant increases in sugar and dairy prices and more moderate increases for meat and oils.
However, the September Cereal Price Index fell for the third consecutive month by 2.7 points and is currently 8.9 percent below its year-earlier level. This decrease has been driven by record global wheat production, above-average harvests for coarse grains, and an expected rebound in global rice production.

The Vegetable Oil Price Index averaged 172 points in August, up 2.9 points (1.7 percent) due to increased prices for palm, soy, and rapeseed oils. Palm oil prices increased due to weaker than anticipated output growth, while soy oil prices increased due to limited global export availabilities. Rapeseed oil prices increased due to concerns about a third consecutive year of falling global output.

The Dairy Price Index experienced the largest increase this month, up 13.8 percent over August and 38 percent over April. These spikes in prices are mainly due to reduced global stocks and strong internal demand in the EU. By contrast, the Meat Price Index remained unchanged at 163.5 points, but has risen 12.6 percent since January when prices hit a five-year low.

The Sugar Price Index was up 6.7 percent over August, marking five consecutive months of price increases. This latest surge in the price of sugar can largely be attributed to unfavorable weather conditions in Brazil, the world’s largest sugar producer, as well as to reports of lower production in India and tight supplies in Thailand and China.

The latest edition of the AMIS market monitor highlights that production of the four crops covered (wheat, maize, rice, and soybean) generally has a favorable outlook for 2016-2017.

Wheat production is expected to reach an all-time high of 742 million metric tons in 2016-2017, up 1 million tons from last month’s outlook. This increase is driven by higher outputs in all regions except North Africa and Europe. Trade estimates in wheat were also increased by 1 million tons, reaching 2015-2016 levels due to strong import demand in the EU and Thailand. End-of-year stocks were also revised up in several countries, although they were lowered for India; this has led global ending stocks to reach to 234 million, their highest level since 2002.
Maize production estimates for 2016 were lowered slightly to 1029 million tons due to expected production decreases in Brazil, the EU, and Canada. Maize utilization and international trade were increased by 3 and 1 million tons, respectively, due to strong growth in feed use in India and larger imports by Mexico. By contrast, maize end-of-year stocks were lowered significantly due to historical revisions in India.

Rice production estimates were further scaled up this month due to improved prospects in Indonesia, the Philippines, Columbia, and India; these favorable expectations more than outweighed downward revisions in the US. Rice trade remained virtually unchanged as higher exports by India offset reductions in exports by Thailand and Vietnam. The outlook for rice growing conditions remains favorable for East, South, and South East Asia due to sufficient rainfall. However, there are concerns over excess rainfall in southern China, northern Vietnam, and northern Thailand. End-of-year rice stocks were estimated up by 4 million tons to 170 million tons.

Similarly, soybean production was revised up to 330 million tons, reaching record levels due to a record crop in the United States; however, production estimates in Canada were lowered due to dry weather. Soybean trade estimates were up slightly, and end-of-year stocks were also revised upwards to 38 million tons. These stock levels, however, represent a 9-percent decrease from 2015-2016 levels.

The next updates to the FAO Food Price Index and AMIS Market Monitor will be released on November 10th.

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