2014 crop production seen at record level; first 2015 wheat forecast made
Combine harvesters work the fields in France. Europe enjoyed a bumper wheat crop in 2014. (FAO photo) |
Rome—The Food and Agriculture
Organization (FAO) Food Price Index declined to a 55-month low in February,
dropping 1.0 percent from January and 14 percent below its level a year
earlier.
Lower
prices for cereals, meat and especially sugar more than offset an increase in
milk and palm oil prices.
The
FAO Food Price Index averaged 179.4 points in February, down from 181.2 points
in January and 208.6 points in February 2014.
Its
ongoing decline - to its lowest level since July 2010 - reflects robust supply
conditions as well as ongoing weakness in many currencies versus the U.S.
dollar, which appear set to continue, said Michael Griffin, FAO's dairy
and livestock market expert.
“The
first thing to flag is the favorable outlook for production of a number of
crops in 2015,” he said. "Stocks are also very strong" for most
cereals, he added.
FAO's
Food Price Index is a trade-weighted index that tracks prices of five major
food commodity groups on international markets. It aggregates price sub-indices
of cereals, meat, dairy products, vegetable oils and sugar.
Wheat and sugar prices drop, powdered milk and palm oil rise
The FAO Cereal Price
Index averaged 171.7 points in February, down 3.2 percent from
January, with booming prospects for wheat output explaining the bulk of the
decline. Rice prices were more stable, with aromatic rice quotations
increasing markedly, compensating for much the declines observed in the other
rice varieties.
The FAO Sugar Price Index averaged
207.1 points in February, down 4.9 percent from January, the sharpest move of
any commodity. The drop reflected optimism on production prospects in Brazil
after recent rainfalls, as well as India's announcement it will subsidize
exports to boost sugar sales abroad.
The FAO Meat Price Index averaged
187.4 points in February, down 1.4 percent from its revised January value. Beef
and mutton prices declined, largely due to a stronger U.S. dollar against the
Brazilian real and the Australian dollar. Pigmeat prices rose for the first
time in eight months, helped up by the European Union's decision to provide aid
for private storage in the sector.
The FAO Dairy Price Index rose for
the first time in a year, averaging 181.8 points in February, representing a
4.6 percent increase from the previous month. The increase was driven by milk
powders and reflects both a seasonal slowdown in European output as the quota
for the season draws to a close and a crimped supply from New Zealand and
Australia. Cheese quotations remained largely unchanged.
The FAO Vegetable Oil Price Index averaged
156.6 points, up 0.4 percent from January. This reflected a sizeable rise in
palm oil prices - resulting from recent floods in Malaysia and from a hike in
Indonesian domestic biofuel subsidies expected to stoke demand - even as soy
oil prices continued to decline given prospects of bumper soybean harvests in
South America.
2015
wheat output seen dipping slightly from record 2014 level
FAO
has further raised its estimate of 2014 world cereal production, now seen at 2.542
billion tones, amounting to 20 million tones or one percent higher than in
2013. The bulk of the increase reflects wheat production gains in Argentina,
Central Asia and Europe.
With
the 2015 winter wheat crop already developing in the northern hemisphere, FAO
forecasts that production for the year would amount to 720 million tones, or
one percent below the record output of 2014, discounting normal yields in the
European Union and Central Asia after strong levels last season.
Globally,
1.107 billion tons of cereals are forecast to be used for food consumption in
2014/15, resulting in a slight increase in average per capita intake to 153.3
kilograms. Cereals used for animal feed are anticipated to grow by 4.0 percent
and account for 877 million tones.
FAO
forecast for world cereal stocks at the close of the 2014/15 crop seasons has
been raised by about 8 million tones since last month to a 15-year high of 631
million tones, with part of the revision resulting from reviewed estimates of
previous years' stock levels in China and Ukraine. (FAO)
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