Global food prices dipped in August, mainly as the prospect of bumper cereal harvests pushed up expectations of larger grain inventories, the UN Food and Agriculture Organization (FAO) said on Thursday.
The FAO Food Price Index was down 1.3 percent from July, averaging 176.6 points last month, the organization said in a written statement.
"The drop was largely driven by a 5.4 percent decline in the FAO Cereal Price Index, reflecting a sharp fall in wheat prices as the outlook for production in the Black Sea region improved," it said.
The FAO noted that it raised its forecast for worldwide cereal production to over 2.6 billion tons, a new all-time record, and said:
"Worldwide stocks of cereals are also expected to reach an all-time high by the close of seasons in 2018."
The organization stated that new assessments were based on larger foreseen wheat harvests, "as improved production prospects in the Russian Federation more than offset downward revisions made for Canada and the United States of America, as well as higher maize and barley outputs in Brazil and the Russian Federation."
"Global rice production in 2017 is also now forecast to reach a record high," FAO added.
- Minor fall in prices as global stocks, trade rise sharply
The FAO stressed that last month’s slight drop in the Food Price Index ended three months of rises, adding: "However, despite this, the Index -- a trade-weighted index tracking international market prices for five key commodity groups -- remained 6 percent above its value a year earlier."
In August, meat prices dropped 1.2 percent while sugar prices slipped 1.7 percent -- backed by positive cane harvest predictions in major producers like Brazil, Thailand, and India, as well as by lower global demand following higher tariffs imposed by China and India.
"But the FAO Vegetable Oil Price Index rose 2.5 percent, led by rising quotations for palm, soy, rapeseed and sunflower oils," it said. "And the FAO Dairy Price Index also rose 1.4 percent from July, led by greater demand for butterfat in Europe and North America."
The organization forecasted greater food use of cereals, especially wheat and rice, and projected an all-time high utilization of coarse grains for animal feed.
"Even so, world cereal stocks are expected to hit a record high of 719 million tons, up 2 percent from their already high levels at the opening of the current seasons," it said.
According to the statement, the FAO also expects a notable increase of wheat inventories in Russia and maize inventories in Brazil.
"World cereal trade is also expected to expand by over 2 percent to reach 403 million tons, a new record," it said, adding:
"The FAO's latest forecast is 8 million tons higher-than-earlier anticipated on account of firmer import demand by China, Brazil, the EU, Iran and Mexico."