ROME - 
(NewMediaWire) - September 11, 2014 - The monthly
food price index from the UN Food and Agriculture Organization (FAO) registered another drop in August,
continuing a five-month downward run and reaching its lowest level since
September 2010.
The FAO Food Price Index's (FFPI) August average of 196.6 points represents
a decrease of 7.3 points (3.6 percent) from July. With the exception of meat,
prices for all of the commodities measured by the index dipped markedly.
Dairy led the pack, with FAO's sub-index for dairy
products averaging 200.8 points in August, down 25.3 points (11.2 percent)
versus July and 46.8 points (18.9 percent) compared to a year ago — the
result of abundant supplies for export coupled with reduced import demand.
Russia's prohibition at the
beginning of the month on imports of dairy products from several countries
helped depress prices, while slackening imports of whole milk powder by China (the
world's largest importer) also contributed to market uncertainty.
FAO's price index for cereals
averaged 182.5 points in August, down 2.8 points (1.5 percent) from last month
and 24.2 points (11.7 percent) versus August 2013.
However rice bucked
the trend in grains, with its prices rising in August, reflecting increased
import demand, lower-than-expected releases from stockpiles by Thailand and unfavorable weather affecting some
crops in Asia.
"Rice supplies appear to be ample world-wide, but stocks are very much
concentrated in a small number of countries, and often owned by governments.
This means that these countries can very much influence world prices, by
deciding whether to let those supplies flow to the market or not," said
FAO economist Concepción Calpe. "The fact that Thailand is still limiting sales of
the huge rice volume held in public warehouses has been one of the principal
factors underpinning world prices in recent months."
Oils and sugar also down & Meat
prices remain strong
FAO's Food Price Index is a
trade-weighted index that measures prices of five major food commodities on
international markets: in addition to sub-indices for prices of cereals, it
also tracks meat, dairy products, vegetable oils, and sugar.
The vegetable oils
sub-index clocked in at 166.6 points in August, 14.5 points (8 percent) less
than the previous month and the lowest level since November 2009.
FAO's index of sugar
prices averaged 244.3 points in last month, down by 14.8 points (5.7 percent)
from July, but still 2.2 points (1 percent) higher than one year ago.
And its meat sub-index
averaged 207.3 points in August, 2.5 points (1.2 percent) more than in July but
25 points (14 percent) above last year.
Projected 2014 cereal harvest upgraded
by 14 million tonnes
Meanwhile FAO's monthly Cereal Supply and Demand Brief,
also released today, has upped the Organization's forecast for 2014 world cereal production by 14 million
tonnes. At 2.5 billion tonnes (excluding rice in milled terms), the new
projection would be 0.5 percent (13 million tonnes) short of last year's
record.
More optimistic wheat
forecasts were mostly behind the revision in cereal production compared to last
month. Wheat production is now expected to reach 716.5 million tonnes — also
just shy of last year's record harvest.
Wheat crops in China, the Russian Federation, Ukraine
and the United States
are now projected to be larger than previously anticipated.
And production in Argentina, Brazil, China, the EU, India, and the Russian
Federation has increased significantly, offsetting reductions in Australia, the
United States and, especially, Canada — where the latest official forecast
points to a decline of almost 10 million tonnes (26 percent).
For rice, however,
the production outlook worsened compared to July by about 3 million tonnes, as
an erratic rainfall pattern and concerns over El Niño's impacts on crops early
next year marred prospects in China,
India, Indonesia, the Philippines
and Sri Lanka.
Still, at 500.4 million tonnes, global rice production (in milled rice
equivalent) is forecast to surpass the 2013 harvest by 0.4 percent.
All told, the size of global inventories of all cereals is anticipated to rise
to their highest levels in 15 years as a result of two years of good harvests.
FAO now sees world cereal stocks reaching 616 million tonnes by the close of
the seasons in 2015 — 12 million tonnes higher than the previous forecast, and
over 6 percent (37 million tonnes) over stock levels at the start of the
2014-2015 season.
FAO Food Price Index
The FAO Food Price Index is a measure of the monthly change in international prices of a basket of food commodities. It consists of the average of five commodity group price indices, weighted with the average export shares of each of the groups for 2002-2004.
TABLE: http://www.fao.org/worldfoodsituation/foodpricesindex/en/
Monthly release dates for the remainder of 2014: 09 October, 06 November, 04 December.
AUDIO:
Interview with FAO economist Peter Thoenes on this month's food price index
LEARN MORE:
FAO Cereal Supply and Demand Brief
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