FOA forecast points to a decline in global wheat output

Couleur via pixabay

The FAO Cereal Price Index rose 2.5 percent from January, led by increasing prices for wheat, even as maize and rice prices also posted modest increases.

The FAO Vegetable Oil Price Index bucked the trend, declining 4.1 percent amid slowing global import demand for palm oil along with higher soy crop forecasts for Brazil and Argentina, two important exporting countries.

The FAO Meat Price Index rose 1.1 percent, buoyed by higher bovine meat prices as ranchers in Australia rebuilt their herds.

The Dairy Price Index rose slightly, led by butter and whole milk powder.

The FAO Sugar Price Index rose 0.6 percent in February, as ongoing supply tightness in Brazil was only partly offset by expanded beet plantings in the European Union.

First forecasts for 2017

FAO also released its first forecast for global wheat production in 2017, projecting 744.5 million tonnes, which would signal a 1.8 percent decline from its record 2016 level.

Farmers in North America reduced plantings in favour of higher-priced crops, while winter wheat prospects are robust in the Russian Federation, the EU, China, India, and Pakistan, according to the Cereal Supply and Demand Brief.

Prospects for coarse grains production, mainly maize, are generally favourable in the Southern Hemisphere, where the crop is in its final development stage. Large increases are forecast for Argentina and Brazil, while wetter conditions in most of Southern Africa point to a significant recovery from last year's drought-reduced output, although an outbreak of armyworms could limit production gains in some countries of the subregion.

Prospects for 2017 paddy crops along and south of the Equator remain mixed, and output and consumption are predicted to grow modestly.

The global cereal supply and demand situation in 2016/17 is poised to remain "broadly comfortable" for the third consecutive season, FAO said. Total use of wheat for direct human consumption is expected to rise by 1.1 percent in the year ahead, with feed utilisation to increase by as much as six percent. Worldwide wheat inventories are anticipated to rise by 6.6 percent, or 15 million tonnes, to nearly 240 million tonnes, led by stock build-ups in Australia, China, Russia and the US.

World trade in cereals in 2016/17 is forecast at 393 million tonnes, a slight drop from the previous marketing year, reflecting a sharp 4.5 percent reduction in the trade of coarse grains even as trade in wheat is anticipated to grow by three percent and that in rice at a brisk four percent clip.