UN food agency ups cereal forecasts as supply outlook improves
Wednesday, 25 June 2014 00:00
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FAO price index falls 2.5 points to 207.9 in May
Raises world cereal production forecast by almost 1%
Hikes end-season 2015 cereal stocks by 10 m tons
Reuters: The United Nations food agency has raised its outlook for world cereal production and stocks as expectations that ample supply of most food commodities would continue dragged prices down for the second month in a row.
The Food and Agriculture Organisation’s (FAO) price index, which measures monthly price changes for a basket of cereals, oilseeds, dairy, meat and sugar, averaged 207.9 points in May.
That was a fall of 2.5 points or 1.2% from April, when a sharp drop in dairy prices pulled the index down 3.5 points or 1.6% from the previous month.
The agency raised its world cereal production forecast to nearly 2.48 billion tons, almost 1% higher than it reported the month before. It predicted world cereal stocks at the end of crop seasons in 2015 would be 576 million tons, an increase of almost 10 million tons from last month’s forecast.
“Markets are experiencing a rather ample supply situation and expect good supply prospects,” FAO senior economist Abdolreza Abassian said. “This is the driving factor behind the downward pressure on prices.”
Dairy prices fell sharply again in May, registering a 5% slide, following a period of exceptionally high prices in 2013 and early 2014 due to limited export supplies.
Cereal prices fell 1.2% in the month, mostly due to good maize supply prospects in 2014-2015. Vegetable oil prices also declined.
Wheat prices, which had contributed to price rises in recent months partly due to fears of disrupted trade from Ukraine, fell in the second half of May as shipping patterns from the country remained regular and U.S. weather improved, the FAO said.
Concerns over a possible sugar production deficit exacerbated by El Nino weather boosted prices by 3.7% in May, but indications of large inventories in India and Thailand subdued the rally in the second half of the month.
Meat prices changed little from April as the ovine meat production year drew to a close in Oceania and concerns about Porcine Epidemic Diarrhea constraining pigmeat supplies from the United States appeared to have calmed.
