FAO expects more balanced food markets, less price volatility
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ROME, Nov. 7, 2013- Food commodity markets are becoming more balanced and less price volatile than in recent years thanks to improved supplies and a recovery in global inventories of cereals, according to FAO's Food Outlook report published today.
"The prices for most basic food commodities have declined over the past few months. This relates to production increases and the expectation that in the current season, we will have more abundant supplies, more export availabilities and higher stocks," said David Hallam, Director of FAO's Trade and Markets Division.
The sharp increase in 2013 cereal production mostly stems from a recovery of maize crops in the United States and record wheat harvests in CIS countries--those that Commonwealth of Independent States. World rice production in 2013 is expected to grow only modestly.
Global cereal stocks, ending in 2014, are also anticipated to increase, by 13 percent, to 564 million tonnes, with coarse grains alone up by 30 percent, mostly in the United States. Wheat and rice stocks are also projected to rise, by 7 percent and 3 percent respectively. The expansion in world cereal stocks would result in the global cereal stocks-to-use ratio reaching 23 percent, well above the historical low of 18.4 percent in 2007/08.
In 2013, the world food import bill is set to decline by 3 percent to $1.15 trillion, with import costs of cereals, sugar, vegetable oils and tropical beverages falling, but dairy, meat and fish remaining firm, according to FAO's latest Food Outlook.
Food prices rise slightly
The FAO Food Price Index, also published in this report, rose slightly in October, averaging 205.8 points. This was 2.7 points, or 1.3 percent above September, but still 11 points, or 5.3 percent below its October 2012 value. The slight increase was largely driven by a surge in sugar prices, although prices of the other commodity groups were also up.
World sugar production is forecast to increase only slightly in 2013/14. The rise is likely to be limited in Brazil, the world's largest sugar producer and exporter, where unfavourable weather conditions have hampered harvesting operations. World sugar consumption is set to grow by about 2 percent in 2013/14.
The Index, which is a measure of the monthly change in international prices of five major food commodity groups (including 73 price quotations), has undergone some changes in the way it is calculated, although the new approach did not significantly alter the values in the series, FAO reported. The revised Index has also been extended back to 1961.
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