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Food price index of FAO for Aug at 196.6 points; Registers 7.3-pt drop
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Saturday, 13 September, 2014, 08 : 00 AM [IST]
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Rome
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fiogf49gjkf0d The Food and Agriculture Orgainsation’s (FAO) monthly food price index’s August average of 196.6 points represented a decrease of 7.3 points (3.6 per cent) from July 2014.
The drop continued a five-month downward run and reached its lowest level since September 2010. With the exception of meat, the prices of all the commodities measured by the index dipped markedly.
FAO’s sub-index for dairy products averaging 200.8 points in August, down 25.3 points (11.2 per cent) vis-a-vis July and 46.8 points (18.9 per cent) compared to a year ago - the result of abundant supplies for export coupled with reduced import demand.
Russia’s prohibition at the beginning of the month on the imports of dairy products from several countries helped depress prices, while slackening the imports of whole milk powder by China (one of the world’s largest importers) also contributed to market uncertainty.
FAO’s price index for cereals averaged 182.5 points in August, down 2.8 points (1.5 per cent) from last month and 24.2 points (11.7 per cent) vis-a-vis August 2013.
With 2014 being another record year for wheat production, prices for the staple grain continued to slide in August, reaching their lowest value since July 2010. Similarly, near-ideal growing conditions in key producing areas, coupled with abundant stocks, have seen maize prices retreat to a four-year low.
However rice bucked the trend in grains, with its prices rising in August, reflecting an increased import demand, lower-than-expected releases from stockpiles by Thailand, and unfavourable weather affecting some crops in Asia.
“Rice supplies appear to be ample worldwide, but stocks are very much concentrated in a small number of countries, and often owned by governments. This means that these countries can very much influence world prices, by deciding whether to let those supplies flow to the market or not,” said FAO economist Concepción Calpe.
“The fact that Thailand is still limiting sales of the huge rice volume held in public warehouses has been one of the principal factors underpinning world prices in recent months,” she added.
Oils, sugar also down; Meat prices remain strong
FAO’s Food Price Index is a trade-weighted index that measures the prices of five major food commodities on international markets. In addition to the sub-indices for the prices of cereals, it also tracks meat, dairy products, vegetable oils, and sugar.
The vegetable oils sub-index clocked in at 166.6 points in August, 14.5 points (eight per cent) less than the previous month, and the lowest level since November 2009.
FAO’s index of sugar prices averaged 244.3 points in the last month, down by 14.8 points (5.7 per cent) from July, but 2.2 points (one per cent) higher than it was a year ago.
And its meat sub-index averaged 207.3 points in August, 2.5 points (1.2 per cent) higher than it was in July, but 25 points (14 per cent) above last year.
Projected 2014 cereal harvest upgraded by 14 million tonne
Meanwhile, FAO’s monthly Cereal Supply and Demand Brief has upped the Organisation's forecast for 2014 world cereal production by 14 million tonne. At 2.5 billion tonne (excluding rice in milled terms), the new projection would be 0.5 per cent (13 million tonne) short of last year’s record.
More optimistic wheat forecasts were mostly behind the revision in cereal production compared to last month. Wheat production is now expected to reach 716.5 million tonnes - also just shy of last year’s record harvest.
Wheat crops in China, the Russian Federation, Ukraine and the United States are now projected to be larger than previously anticipated.
And production in Argentina, Brazil, China, the European Union (EU), India, and the Russian Federation has increased significantly, offsetting reductions in Australia, the United States and, especially, Canada - where the latest official forecast points to a decline of almost ten million tonne (26 per cent).
For rice, however, the production outlook worsened compared to July by about three million tonne, as an erratic rainfall pattern and concerns over El Niño's impacts on crops early next year marred prospects in China, India, Indonesia, the Philippines and Sri Lanka.
Still, at 500.4 million tonne, the global rice production (in milled rice equivalent ) is forecast to surpass the 2013 harvest by 0.4 per cent.
The size of global inventories of all cereals is anticipated to rise to their highest levels in 15 years as a result of two years of good harvests.
FAO now sees world cereal stocks reaching 616 million tonne by the close of the seasons in 2015 - 12 million tonnes higher than the previous forecast, and over six per cent (37 million tonne) over stock levels at the start of the 2014-15 season.
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