Global food prices rose for the third consecutive month in August, influenced by generally firmer demand and a weaker U.S. dollar, according to the U.N. Food & Agriculture Organization (FAO).
The FAO Food Price Index, which tracks the international prices of the most commonly traded food commodities, averaged 96.1 points in August, up 2.0% from the previous month and reaching its highest level since February 2020.
The FAO Cereal Price Index rose 1.9% from July, averaging 7.0% above its value in August 2019, with coarse grains leading the rise. Sorghum prices rose 8.6% -- and stood at 33.4% above their year-ago level, mostly on the back of strong import demand by China. Maize prices rose 2.2% amid concerns that recent crop damages in Iowa would impact supply. International rice prices also rose, underpinned by seasonally tight availabilities and increasing African demand.
The FAO Sugar Price Index rose 6.7% from the previous month, reflecting reduced production prospects due to unfavorable weather conditions in the European Union and Thailand, the world's second-largest sugar exporter, as well as strong import demand by China.
The FAO Vegetable Oil Price Index increased by 5.9%, led by firmer values for palm oil especially but also soybean, sunflower and rapeseed oils. The moves mainly reflect prospective production slowdowns in leading palm oil-producing countries amid firm global import demand.
The FAO Dairy Price Index was virtually unchanged from July, with cheese and whole milk powder quotations declining amid expectations of ample seasonal export availabilities in Oceania, while butter prices rose due to tightening export availabilities in Europe in the wake of the August heat wave reducing milk output.
The FAO Meat Price Index was also almost unchanged since July -- although down 8.9% from August 2019 -- as the effect of lower import demand for bovine, poultry and ovine meats was offset by surging import demand for pig meat from China.
Outlook for cereals updated
FAO lowered its forecast for 2020 world cereal production by 25 million metric tons from a July projection, due largely to expectations for lower maize output in the U.S. However, despite this reduction, such an outcome would still represent an all-time high, amounting to 58 mmt above the 2019 output.
Record maize harvests are projected for Argentina and Brazil, while global sorghum production is expected to grow 6% from the previous year. Worldwide rice production in 2020 is also expected to reach a new record of 509 mmt.
FAO's new forecast for world cereal utilization in 2020-21 stands at 2.76 billion mt, up 2.0% on an annualized basis
Global cereal stocks are projected to rise 1.7% to 895.5 mmt by the close of the 2021 seasons, translating to a world cereal stocks-to-use ratio of 31.8%, slightly down from July but still relatively high from a historical perspective.
Buoyed by expected larger shipments of rice and coarse grains, world trade in cereals in 2020-21 is now pegged at 441.4 mmt, 1.6% above the 2019-20 level.