FAO Food Price Index up slightly in March as sugar prices jump
The FAO Food Price Index for March was also released today. Overall, the Index rose by 1.0 percent compared to February, as soaring sugar prices and continued increase in palm oil quotations more than offset plunging dairy product prices.
The Index averaged 151.0 points in March, its highest level in 2016, but still some 12.0 percent below its level of a year earlier.
The FAO Food Price Index is a trade-weighted index tracking international market prices for five key commodity groups: major cereals, vegetable oils, dairy, meat and sugar. Its decline over the past year reflects ample food supplies, a slowing global economy and a stronger US dollar.
International trade in cereals in 2016/17, however, is poised to decline for the second consecutive season – by 1.4 percent to 365 million tonnes – due to ample stockpiles and modest demand growth in many importing countries.
Global cereal utilization in 2016/17 is foreseen to grow only modestly, rising by around 1.0 percent to 2 547 million tonnes, according to very preliminary new estimates.
As utilization is anticipated to exceed production, cereal reserves would need to be drawn down to fill the gap. FAO’s first forecast for world cereal stocks at the close of seasons ending in 2017 points to a likely 3.9 percent annual decline to 611 million tonnes. However, the resulting world cereal stock-to-utilization ratio would still approach 23 percent, well above the historical low of 20.5 percent registered in the 2007/2008 season.
World cereal production in 2016 is set to amount to 2 521 million tonnes, just 0.2 percent off last year’s large output and the third-highest global performance on record, according to FAO’s first forecast for the new season, released today.
Large inventory levels and relatively sluggish global demand mean that market conditions for staple food grains appear stable for at least another season, the agency’s latest Cereal Supply and Demand Brief predicts.