Rising Cereal and Dairy Prices Reported in Latest FAO Food Price Index
Updated at 1500558854
Photo Credit: Vinay Kumar/IFPRI

The latest FAO Food Price Index and AMIS Market Monitor were released earlier this month. 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 soy and provides an overview of the market situation and outlook for each of these crops.

The FAO Price Index averaged 175.2 points in June 2017, an increase of 1.4 percent from May and 7 percent above its level from June 2016. The second consecutive month of increase in FFPI value, June’s rise can be attributed to large increases in dairy and cereal prices.

The Cereal Price Index reached a one-year high in June. Wheat quotations increased the most, following deteriorating crop conditions in the United States. On the other hand, record maize harvests in South America kept maize prices under downward pressure.

The Vegetable Oil Price Index averaged 162.1 points in June, down 3.9 percent from May. The slide reflects falling palm and soy oil values due to good production prospects in Southeast Asia for palm oil and bumper crops of soy in South America.

The Dairy Price Index is up 8.3 percent from May, bringing the Index to a total of 209 points. This level is close to the highs seen over the past three years but still well below the peak seen in February 2014. The price of butter rose the most (14.1 percent) to reach at an all-time high in June.

The Meat Price Index is also up 1.8 percent from May, marking the sixth consecutive month of moderate price increases. This rise is due to limited export supplies from Oceania coupled with strong buying interest.

The Sugar Price Index averaged 197.3 percent in June, a decrease of almost 31 points. International sugar prices have fallen steadily since February and reached a 16-month low in June. The continued decline reflects large export availabilities, in particular robust Brazilian supplies, coupled with weak import demand from China, the world’s leading importer.

In the most recent AMIS Market Monitor, wheat, maize, soybean, and rice supplies are expected to remain adequate in 2017-2018, with wheat stocks projected to end the season above their already high opening levels. However, the report notes that much still depends on weather conditions, especially during the critical summer months in the northern hemisphere.

Although the AMIS wheat production forecast is lowered this month due to dry conditions in Europe, global production levels are still expected to be the second highest on record. The wheat trade forecast is also rising due to stronger import demand; wheat stocks are forecast lowered on downward adjustments in Argentina and the EU but are still very high thanks to an anticipated increase in stocks in China.

Maize production for 2018 is projected to exceed its 2017 peak due to record crops in Argentina, Brazil, and South Africa. The forecast is also higher than that projected in May because of upward revisions from the US. The forecast for maize trade lifted significantly in June, reflecting strong import demand in the face of ample export supplies. Stocks are falling by less than what was forecast last month due to upward revisions in China and the US.

The rice production forecast is on an upswing due to better prospects in Brazil, Pakistan, and Myanmar; positive prospects in these countries outweigh reductions in the US and Vietnam. Upward adjustment in exports by China, India, and Myanmar offset reductions for exports by Thailand and Pakistan. Global rice stocks are forecast up slightly due to upward revisions and carryovers in Bangladesh, Myanmar, and the Philippines.

Soybean production forecasts for 2017-2018 are slightly down this month, reflecting downward corrections for Brazil, India, and Canada. Despite a drop of 2.1 percent from last year, however, global soybean output would remain the second largest on record. Trade forecasts anticipate a 3.3 percent increase from 2016-2017. Stocks are projected to contract by 4 million tonnes from the 2016-2017 all-time high, with the largest reductions expected in Argentina and Brazil.

By: Jenn Campus