International prices for agricultural commodities continued to decline in April and abundant inventories are poised to offset any pressure from the slight reduction in global harvests expected this year.
Worldwide cereal production will likely decline by 1.5 percent from last year’s record-breaking output, mainly due to reduced acreage planted with maize, but the impact will be cushioned by ‘exceptionally high’ levels of existing stocks, according to the latest forecasts in FAO’s biannual Food Outlook report published yesterday.
FAO’s first forecast for global cereal production in 2015, assuming normal weather conditions for the remainder of the season, amounts to 2.509 billion tonnes, a bit down from last year’s record but nearly 5 percent above the average of the past five years.
The modest decline in output would require running inventories down by around 3 percent in the new season 2015-16, with faster drawdown for coarse grains and rice than for wheat.
"The world food import bill is forecast to reach a five-year low in 2015", the report says, mainly driven by a decline in international prices, low freight rates and a strong US dollar. Import volumes of the various food components of the bill were little changed or even rising. Low income countries are also expected to benefit from lower import bills.
FAO’s Food Price Index declined 1.2 percent in April from March, reaching 171 points, its lowest level since June 2010 and 19.2 percent less than a year ago.
Dairy prices fell most, but sugar, cereals and vegetable oils prices also declined. By contrast, meat values rose in April, their first increase since August 2014.
The Food Price Index is a trade-weighted index that tracks prices of five major food commodity groups on international markets. It aggregates price subindices of cereals, meat, dairy products, vegetable oils and sugar.
International food prices are likely to stay under downward pressure due to large supplies and a strong US dollar, according to the Food Outlook, which noted that "currency movements and macroeconomic developments may have important implications for markets again in 2015-16."