Posts Tagged ‘EU-27’
Six months of peak for the FAO food index
Since 2011 January, the FAO food price index components have recorded some of their highest monthly readings. Sugar touched a peak in January (420.2) and February (418.2), oils reached highs in February (279.3) and January (277.7), cereals reached highs in April (265.4) and May (261.3), meat touched a peak in June (180.4) and in April (180.4).
The consolidated food price index has been within 6 points (2.5%) of the February peak (237.7) for all the months of 2011. In June 2011 the index is less than 4 points off the February peak.
FAO’s Food Price Index rose one percent to 234 points in June 2011 – 39 percent higher than in June 2010 and four percent below its all-time high of 238 points in February of this year. The FAO Cereal Price index averaged 259 points in June, down one percent from May but 71 percent higher than in June 2010. Improved weather conditions in Europe and the announced lifting of the Russian Federation’s export ban contributed to the price drop.
However the maize market remained tight because of low 2010 supplies and continued wet conditions in the United States. Prices of rice were mostly up in June, reflecting strong import demand and uncertainty over export prices in Thailand, the world’s largest rice exporter. The FAO Sugar Price Index rose 14 percent from May to June, reaching 359 points, 15 percent below its January record. Production in Brazil, the world’s biggest sugar producer, is forecast to fall below last year’s level. The FAO Dairy price Index averaged 232 points in June, virtually unchanged from 231 points in May. The FAO Meat Price Index averaged 180, marginally up from May with poultry meat rising three percent and climbing to a new record, while pig meat prices declined somewhat.
Following two consecutive revisions to the US crops and planting prospects for 2011, FAO’s latest forecast for world cereal production in 2011/2012 stands at nearly 2 313 million tonnes, 3.3 percent higher than last year and 11 million tonnes above FAO’s last forecast on 22 June. World cereal utilization in 2011/2012 is forecast to grow 1.4 percent from 2010/2011, reaching 2 307 million tonnes, just five million tonnes under forecast production. World cereal stocks at the close of the crop season in 2012 are now expected to stand six million tonnes above their opening levels. While wheat and rice inventories are expected to become more comfortable, coarse grains stocks, especially maize, would remain tight.
The FAO Food Price Index (FFPI) averaged 234 points in June 2011, 1 percent higher than in May and 39 percent higher than in June 2010. The FFPI hit its all time high of 238 points in February. A strong rise in international sugar prices was behind much of the increase in the June value of the index. International dairy prices rose slightly in June, while meat prices were stable. Of all the major cereals, prices of wheat fell most and rice increased. Among the oils and fats, prices of soybean oil were steady but palm oil weakened.
[Detailed data available from FAO here.]
The FAO Cereal Price Index averaged 259 points in June, down 1 percent from May but 71 percent higher than in June 2010. Improved weather conditions in Europe and the announced lifting of the export ban by the Russian Federation (from July) depressed wheat prices. However, maize markets were supported by tight old crop (2010) supplies and continued wet conditions in the United States. Prices of rice were mostly up in June, reflecting strong import demand and uncertainty over export prices in Thailand, the world largest rice exporter.
The FAO Oils/Fats Price Index averaged 257 points in June, down marginally from May. Continued production uncertainties and expectation of stronger world import demand sustained soybean oil prices. By contrast, palm oil prices eased further, reflecting improved supply prospects and ample export availabilities in Southeast Asia. The FAO Dairy Price Index averaged 232 points in June, virtually unchanged from 231 points in May. This was the result of diverging price movements, with prices of skim milk powder and casein up by 5 percent, whole milk powder down by 3 percent, while prices of butter and cheese remained stable.
The FAO Meat Price Index averaged 180 points, marginally up from May. Poultry meat prices experienced a 3 percent rise, breaking a new record, while pig meat prices declined somewhat. Prices of bovine and ovine meat were subject to modest increases, from already high levels. The FAO Sugar Price Index averaged 359 points in June, up 14 percent from May and only 15 percent below its January record. The price strength reflects dynamic short-term demand against tight exportable availabilities, notably in Brazil, the world’s largest sugar producer where production is forecast to fall below last year’s level.
Food production and grain trade, Jan 2011
The International Grains Council (IGC) has released its Grain Market Report for 2011 January. The IGC said that world grains supplies are forecast to tighten in 2010-11 but the outlook is little changed from two months ago. World production is expected to decline by 3.8%, to 1,726m. tons: the wheat estimate is lifted on better than expected southern hemisphere crops but the maize total is cut.

A serious drought has developed in eastern China over the past few months. Total precipitation has been scarce since October 2010, with some locations on the North China Plain receiving less than 10 percent of normal precipitation through December 2011. A lack of snow cover has deprived the dormant winter wheat crop of valuable moisture and protection from frigid temperatures and winds. Seasonably dry and cold weather is expected to continue for the next two weeks. USDA's WASDE said the impact of the drought has been mitigated by the widespread availability of water for irrigation, but crop stress could become serious if the drought continues after the winter wheat emerges from dormancy in February/March 2011.
By far the biggest fall in grains output was in drought-affected Russia, with big reductions too in the EU, the US, Kazakhstan and Ukraine. A further rise in world grains consumption is forecast in 2010-11, to 1,787m. tons. However, at 1.4%, the rise is flatter than in recent years. The expansion in industrial use has slowed markedly, especially in the US ethanol sector, although recent use there has been higher than anticipated. Total feed use will only rise moderately this year.
The forecast fall of 62m. tons in global carryover stocks mirrors the reduction in the major grain exporters, with big declines in Canada, the EU, Russia and the US. World trade in grains is expected to rise by 2m. tons, to 242m., only marginally more than before, with bigger imports by the EU and Russia expected to outweigh reductions in Near East and Far East Asia. Because of the fall of 29m. tons in Black Sea shipments, exports by Argentina, Australia, the EU and the US are expected to climb steeply.
IGC said that international grain and oilseed prices advanced strongly in December and again in January, with some values at their highest for two years. However, export prices remained below the peaks recorded early in 2008. While there has been little fundamental change in the overall supply and demand balance in the past two months, markets were driven higher by concerns about supplies of quality milling wheat and the tightening outlook for maize and soyabeans.
The influence of other commodities, including crude oil, also featured regularly on the major exchanges. For wheat, reports that the extremely wet conditions in eastern Australia would render at least one-third of the country’s large wheat crop unfit for flour milling were especially bullish. More recently, better prospects for US exports and a winter wheat acreage report showing a smaller than expected rise in Hard Red Winter wheat plantings further triggered buying.
IGC said that China was among several recent customers for Australian feed grade wheat. For maize, there were worries about a reduced official US carryover forecast as well as about whether plantings for the next crop would be sufficient to prevent stocks falling further in 2011-12. The impact of dryness, attributed to the La Niña event, on Argentina’s upcoming harvest added to the market’s nervousness. Similarly, despite quite ample current stocks, US soyabean prices moved higher, initially because of continued heavy demand from China but more recently due to a lower official US supply estimate and strength in crude oil. Rice export prices also increased, but while Thai values in late-December climbed to a ten-month peak, they subsequently fell back as the main crop harvest advanced. After mostly declining since June, ocean freight rates for grains firmed slightly in recent months, despite a further slide in the Capesize sector.
The US Department of Agriculture’s World Agricultural Supply and Demand Estimates (WASDE) for 2011 January has said that global 2010-11 wheat supplies are raised slightly this month as increased beginning stocks are mostly offset by lower foreign production. Beginning stocks for Argentina are up 0.9 million tons with upward revisions to 2008-09 and 2009-10 production estimates. Argentina production is also raised 0.5 million tons for 2010-11 as harvest results indicate higher-than-expected yields. Production in Brazil is raised 0.4 million tons as favorably dry harvest weather boosted yields for the 2010-11 crop. EU-27 production is raised 0.3 million tons based on the latest official estimates for Poland. More than offsetting these increases are reductions for Kazakhstan and Australia. Kazakhstan production is lowered 1.3 million tons based on the latest government reports. Australia production is lowered 0.5 million tons as heavy late-December rains and flooding further increased crop losses in Queensland.
According to WASDE 2011 January, world wheat imports and exports for 2010-11 are both raised slightly. South Korea imports are raised 0.4 million tons, mostly offsetting an expected reduction in corn imports. Imports are also raised 0.2 million tons each for Thailand and Vietnam based on the pace of shipments to date and the increased availability of feed quality wheat in Australia. Imports are lowered 0.5 million tons for EU-27 based on the slow pace of import licenses to date. Major shifts among exporters are projected as importers focus on U.S. supplies to meet their milling needs. Australia exports are reduced 1.5 million tons as quality problems limit export opportunities. Kazakhstan exports are reduced 1.0 million tons with lower supplies. While Argentina marketing-year (December-November) exports are raised 0.5 million tons, exports during the remainder of the July-June world trade year are expected to be lower based on the slow pace of government export licensing.
Global 2010-11 wheat consumption is projected 1.2 million tons lower, mostly reflecting reduced wheat feeding in EU-27, the United States, and Kazakhstan. Food use is also lowered for EU-27 and Pakistan. Partly offsetting are increases in feed use in South Korea, Thailand, and Vietnam, and higher expected residual loss in Australia with the rain-damaged crop. Global ending stocks are raised 1.3 million tons with increases for EU-27, Argentina, and Australia, more than offsetting the U.S. reduction.
WASDE 2011 January said that global 2010-11 rice production, consumption, trade and ending stocks are lowered slightly from a month ago. The decrease in global rice production is due primarily to a smaller crop in Egypt, which is down 0.5 million tons (-14%) to 3.1 million. Egypt’s area harvested in 2010-11 is reduced 19 percent from a month ago and is down 30 percent from the previous year. A reduction in the Egyptian government’s support of producer prices has discouraged farmers from planting rice. Additionally, the Egyptian government has imposed water restrictions thus reducing irrigation water availability. Furthermore, government restrictions have reduced exports. Global imports are increased slightly due primarily to increases for Indonesia and Turkey, but partially offset by a reduction for Egypt. Global exports are increased slightly due mostly to an increase for Thailand, partially offset by a decrease for Egypt. World ending stocks are projected at 94.4 million tons, down 0.4 million from last month and last year.
Food production and grain trade, May 2010
This is to be a monthly posting from now on. It will for a start draw on three main sources of global analysis: the Food and Agriculture Organisation (FAO), the International Grains Council, and the US Department of Agriculture Economic Research Service. Extracts from the three major sources run below, but this is to be placed in global context by the food production and supply situation in two of our neighbours in South Asia, Nepal and Afghanistan. There is hunger and displacement in Pakistan and Sri Lanka too, and I’ll update this posting with relevant reports. Also contrast the global views with the announcement from the US Department of Agriculture, which comes at the end of the list of extracts.
[1] “Nominal prices, in US dollar terms, of staple food commodities, mainly rice and wheat, have generally declined from the 2008 peak but remain significantly above their pre-2008 food-crisis levels in several countries. The price impact on overall food consumption of the vulnerable population is still expected to be substantial. Prices of rice have been increasing in India since the second half of 2008 and currently are above their levels of a year ago 5 percent in Chennai to 42 percent in Patna.”
“Retail prices of rice have also been rising since late 2009 in Bangladesh, the Philippines, Pakistan and Myanmar. In exporting countries such as Thailand and Viet Nam, rice prices (in local currencies) have declined since January 2010 due to strong international demand. Prices of wheat in India and Pakistan have also been rising steadily since October 2008. Recent increases are attributed to concerns over the unfavourable harvests of the current 2010 Rabi season. In Afghanistan, prices of wheat have been coming down since the 2009 bumper harvest in the country.” From FAO Crop Prospects and Food Situation May 2010
[2] “The forecast of world wheat production is increased by 2m. tons, to 660m. (676m.). World wheat consumption is forecast to grow by 1%, to a record 654m. tons, unchanged from last month. The forecast of global stocks is raised by 2m. tons, to a nine-year high of 201m. (195m.), with much of the increase in China and India.”
“World rice production in 2009/10 is estimated to decline for the first time in seven years, by 1%, to 442m. tons, mostly reflecting a reduced main crop in India. At 442m. tons, rice consumption will expand by 1%, in line with the global population trend. Inventories in China are expected to rise, but those in India and the five leading exporters are forecast to decrease. World trade in calendar 2010 is projected to recover by 5%, to 29.9m. tons, underpinned by larger shipments to Far East Asian markets.” From International Grains Council Grain Market Report 2010 May
[3] “Global wheat supplies for 2010/11 are projected 2 percent higher with larger year-to-year beginning stocks more than offsetting lower expected production. Global 2010/11 wheat production is projected at 672.2 million tons, down 1 percent from 2009/10 and the third largest production on record if realized. Larger projected production in EU-27, South America, and the Middle East is more than offset by expected declines in FSU-12, North Africa, South Asia, China, Canada, and Australia.”
“Global coarse grain production for 2010/11 is projected at a record 1,129.8 million tons, up 2 percent from 2009/10. Most of the 27.4-million-ton increase in coarse grains production results from higher projected foreign corn production, up 19.9 million tons from 2009/10. Higher expected foreign corn area and rising yields combine with higher U.S. area to boost global corn production to a record 835.0 million tons, up 26.5 million from 2009/10. Corn production is projected higher year-to-year for China, Mexico, India, Russia, EU-27, Ukraine, and Canada.”
“Global 2010/11 rice production is projected at a record 459.7 million tons, up 17.6 million or 4 percent from 2009/10. World disappearance (consumption and residual) is projected at a record 453.4 million tons, up 10.9 million or 2 percent. Large crops are projected for most of Asia including record or near-record crops in Bangladesh, Burma, Cambodia, India, Indonesia, the Philippines, Thailand, and Vietnam. Additionally, large crops are forecast for the U.S., EU-27, and Nigeria.” From US Department of Agriculture, World Agricultural Supply and Demand Estimates, 11 May 2010
In Nepal, food supplies are running low in the western hills. An IRIN report from Kathmandu (21 May 2010) says: “Food security for more than 600,000 people in the western hills of Nepal is set to deteriorate, aid agencies warn. With already low agricultural production in the more food-insecure areas, inflation is exacerbating matters further. “A lot of villagers are opting for more desperate coping mechanisms,” Richard Ragan, country representative for the World Food Programme (WFP), told IRIN in Kathmandu. Many villagers are already reducing the number of meals they eat each day, cutting portions, or migrating to urban areas or India for work, he said. ‘In a desperate attempt to buy food, families are even selling their livestock and household assets and the out-migration [to Nepali cities and India] has increased already by 40 percent,’ Ragan said.”
In Afghanistan, farmers face a tough choice: wheat, fruit or saffron? An IRIN report from Kabul (20 May 2010) says: “Pointing to his flourishing wheat field in the western Afghan province of Herat, Abdullah says he regrets cultivating the crop. Wheat is very cheap,” he told IRIN, adding that he would hardly make 50,000 Afghanis (about US$1,050) from his two hectares. “I won’t be able to feed my family properly with this income.” Several farmers contacted by IRIN in Helmand, Kandahar and Balkh provinces had similar sentiments. Wheat is considered a strategic crop and a staple food, but imports are always required, even when there is a bumper harvest. About seven million (over 24 percent of the country’s estimated 27 million population) are food-insecure and many others are highly vulnerable to food price fluctuations, according to aid agencies.”
Here is the announcement from the US Department of Agriculture: “US farmers, ranchers and producers are poised to achieve $104.5 billion in sales – an $8 billion increase over last year and the second highest level in history.
- The trade surplus in agriculture is now forecast to reach $28 billion, the second highest ever achieved.
- The report comes on the heels of an historic six-month pace by U.S. agricultural exports, which shattered records with $59 billion in sales in the first half of the fiscal year and generated a 14 percent increase over the same period last year.
- U.S. agricultural exports to China grew by nearly $3 billion during the first half of the fiscal year to $10.6 billion, making China the United States’ top market for this period. In total, exports to Asia have reached record highs, led by strong increases in China and Southeast Asia. Other outstanding country and regional customers include the European Union, Turkey, and North Africa.”