Food & Beverage Perspectives
Global Food Commodities Projected to Stabilize Throughout 2016

Global Food Commodities Projected to Stabilize Throughout 2016

<p>New statistics from the United Nation&#8217;s Food Agriculture Organization (FAO) reveals global food commodity markets are on a stable path for the year ahead, with solid production prospects and abundant stocks pointing to a broadly stable outcome for prices and supplies.</p>

New statistics from the United Nation’s Food Agriculture Organization (FAO) reveals global food commodity markets are on a stable path for the year ahead, with solid production prospects and abundant stocks pointing to a broadly stable outcome for prices and supplies. Lower food prices than last year means that the world’s food import bill are on course to fall to $986 billion in 2016—below $1 trillion for the first time since 2009—even as traded volumes increase.

The Food Price Index averaged 155.8 points in May 2016, 3.2 points (2.1 percent) higher than in April, but still 7 percent below the corresponding period last year. May’s increase marked the fourth consecutive month of rise in the value of the index. The values of all sub-indices moved up in May except for the vegetable oils, which dropped for the first time in four months. Sugar prices surged while meat, cereals and dairy registered some increase.

The Cereal Price Index averaged 152.3 points in May, up 2.5 points (1.6 percent) from April but down 5.3 percent from May 2015. Maize prices increased sharply for the second consecutive month, mainly on tight export supplies until the harvesting of new crops in the northern hemisphere later this year. Rice quotations also strengthened, especially for Indica varieties, on rising concerns about availabilities in some major trade sources and firming import demand. Dampened by ample global supplies and good production prospects, the increase in international wheat prices was more modest.

The Vegetable Oil Price Index averaged 163.3 points in May, down 3.1 points (1.8 percent) from April. The decline was mainly caused by palm oil, the price of which fell after three months of sharp gains. Weaker than anticipated import demand for palm oil, notably in China, India and the European Union, combined with growing export availabilities in Malaysia have weighed on palm oil international quotations, despite negative prospects for global production.

The Dairy Price Index averaged nearly 128 points in May, up just 0.4 percent from April, but 24 percent below its May 2015 level. During the second-half of May, improved internal prices within the EU and sustained international import demand caused quotations for whole milk powder and butter to rise. International quotations for skimmed milk powder remained close to the EU intervention price

The Sugar Price Index averaged 240.4 points in May, up as much as 25.1 points (11.7 percent) from April. The sharp rebound in May sugar prices was driven mostly by deteriorating production prospects in India, the world’s second-largest sugar producer, as well as lower output in China which raised the expectation of tighter domestic supplies and, hence, higher imports by the country. The latest data showing large export availabilities in Brazil, the world’s largest sugar producer and exporter, supported by a bumper crop (second highest on record), kept prices from rising further.

The Meat Price Index averaged 151.8 points in May, some 3 points (2 percent) higher than in April. Prices of all categories of meat rose, particularly those of pig meat and ovine meat, while smaller increases were registered for bovine and poultry meat. Pig meat quotations from the EU moved up strongly, due to gains in internal prices and continued brisk import demand from Asia. Poultry meat prices recorded a third month of moderate growth.

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