Bountiful harvest lowers food prices
Due to expectations of a large harvest of grain crops and the increase in balances, global food prices in August declined slightly, reports the FAO.
In comparison with July, the August price index declined 1.3% to 176,6 points. This is primarily due to a decrease of 5.4% in the price index for cereals due to a significant drop in wheat quotations due to increased production forecasts in the black sea region.
The forecast of world cereal production, FAO has increased to a record 2,611 billion tons, World ending stocks at the end of 2018 will increase to a record 719 million tons.
Simultaneously with the index for cereals decreased by 1.2% to its meat price index.
Thanks to the favourable forecasts of sugar production in the main producing countries – Brazil, Thailand and India, the index of sugar prices decreased by 1.7%. Besides, the global demand for sugar has decreased after the introduction of China and India have high tariffs.
However, the rising cost of palm, soybean, rapeseed and sunflower oil led to an increase in the price index for vegetable oils by 2.5%.
The increased demand for butter in North America and Europe has led to a rise in the FAO index of dairy products during the month by 1.4%.
FAO predicts the growth of demand for cereals, particularly wheat and canola. While consumption of coarse grains for the production of animal feed will reach a record high.
According to forecasts, the global sales of grain will increase by 2% to the largest in the history of 403 million tonnes, the FAO increased its forecast to 8 million tonnes due to growth in imports by China, EU countries, Brazil, Mexico and Iran.
Recall that the index FAO food price is a weighted average indicator characterizing the dynamics of world prices for five basic food groups.