World food prices jump in November, all-time high cereal harvest predicted

09 Dec 2019 --- World food prices rose significantly in November, reaching their highest point in more than two years, driven by jumps in the international prices of meat products and vegetable oils, according to the FAO Food Price Index. Meat and vegetable oils lead FAO Food Price Index upwards, while cereal prices dip amid record output.

The Index, which tracks monthly changes in the international prices of commonly-traded food commodities, averaged 177.2 points over the month, up 2.7 percent from October and 9.5 percent from the same period a year earlier.

The FAO Vegetable Oil Price Index rose by 10.4 percent in November, as palm oil price quotations rose amid robust global import demand, increased use for the production of biodiesels and expectations of possible supply shortages next year. Rapeseed and soy oil values also increased.

The FAO Meat Price Index increased by 4.6 percent, its largest month-on-month increase in more than a decade. Price quotations for bovine and ovine meats jumped the most, buoyed by strong import demand, especially from China ahead of year-end festivities. Pig and poultry meat prices also rose. 

The FAO Sugar Price Index rose by 1.8 percent from October, buoyed by mounting indications that world sugar consumption in the coming year will surpass production - which is being hampered by less-than-ideal growing conditions in Thailand, India, France and the US. 

The FAO Cereal Price Index, by contrast, declined by 1.2 percent amid stiff competition among the world's leading wheat exporters. Rice values also fell while US maize export prices remained under downward pressure even as those for Argentina and Brazil were generally firmer.

The FAO Dairy Price Index rose marginally from October, nudged up as milk production in Europe entered its seasonal low and global demand remained strong. 

Record cereal production expected for 2019
FAO also released a new worldwide cereal production forecast for 2019, anticipating an all-time high harvest of 2 714 million tons, which would be 2.1 percent higher than in 2018. 

The latest upward revision, contained in the new Cereal Supply and Demand Brief also reflects higher-than-previously predicted coarse grain yields in China, the Russian Federation and Ukraine. 

World output of coarse grains including maize is now forecast at 1,433 million tons, marginally short of the record level registered in 2017. After an upward revision for the EU, global wheat production in 2019 is now forecast to rise by 4.8 percent from 2018 to reach 766.4 million tons. World rice production is likely to reach 515 million tons, a mere 0.5 percent drop from the record set in 2018, with Egypt, Madagascar and Nigeria all poised to spearhead a rebound for African rice production this season. 

FAO's world cereal utilization forecast for 2019/20 stands at 2,709 million tons, up around 21 million tons from the previous season. World cereal stocks at the close of seasons in 2020 are now expected to reach 863 million tons. At this level, the global cereal stock-to-use ratio would approach a relatively high level of 31 percent, underscoring a comfortable global supply situation. 

World trade in cereals in 2019/20 is forecast at 416 million tons, some 1.1 percent higher than in 2018/19. 

Edited by Gaynor Selby