FAO Index dips in October amid significant price drops in rice, wheat

GLOBAL- The FAO Food Price Index, compiled by The Food and Agriculture Organization of the United Nations (FAO) reported on November 3 that its Cereal Price Index declined in October by 1% from the previous month as rice and wheat prices decline.

The FAO Food Price Index tracks monthly changes in the international prices of a set of globally traded food commodities.

According to the report, international rice prices dropped by 2.0 percent amid generally passive global import demand, while those of wheat dropped by 1.9 percent, weighed on by strong supplies from the United States of America and strong competition among exporters.

By contrast, quotations for coarse grains rose slightly, led by maize due to thinning supplies in Argentina.

FAO further reported that the price Index averaged 120.6 points in October, down 10.9 percent from its corresponding value a year earlier.

The FAO Vegetable Oil Price Index decreased by 0.7 percent from September, as lower world palm oil prices, due to seasonally higher outputs and subdued global import demand, more than offset higher prices for soy, sunflower, and rapeseed oils. Soy oil prices rose owing to a robust demand from the biodiesel sector.

The FAO Sugar Price Index declined by 2.2 percent but remained 46.6 percent above its year-earlier level. The October decline was mainly driven by a strong pace of production in Brazil, although concerns over a tighter global supply outlook in the year ahead capped the drop.

Comfortable world cereal stocks
In a new Cereal Supply and Demand Brief, FAO maintained its forecast for world cereal production in 2023 at 2 819 million tonnes, a record high.

Some adjustments were made to country-level figures, notably higher coarse grain production in China and most of West Africa and lower forecasts for the United States of America and the European Union.

World rice production in 2023/24 is forecast to increase marginally year on year. The new revisions include an upgrade to India’s production, more than offsetting various other revisions, particularly a further downgrade of Indonesian production prospects.

World cereal utilization in 2023/24 is forecast to reach 2 810 million tonnes, with the total utilization of both wheat and coarse grains set to surpass the 2022/23 levels while that of rice is expected to stagnate at the previous season’s level.

The world cereals stocks-to-use ratio for 2023/24 is forecast to stand at 30.7 percent, “a comfortable supply situation from a historical perspective” and marginally above the previous year’s level of 30.5 percent, according to FAO.

Global trade in cereals in 2023/24 is forecast at 469 million tonnes, a 1.6 percent contraction from the preceding year.