A four-year decline in global food prices has come to an end, says the FAO Food Price Index, which rose by 0.7 percent in April, the third consecutive monthly increase. “April’s increase was driven by palm oil prices and, in a minor key, cereals, while sugar prices tapered down after a strong increase in March,” said FAO. Vegetable oil prices rose by 4.1 percent due to a grim outlook for production while demand is rising around the world. The FAO index is a trade-weighted index that tracks five commodity groups – cereals, vegetable oil, meat, sugar and dairy. “Its decline over the past year reflects ample food supplies, a slowing global economy and a stronger U.S. dollar,” said FAO.
The companion Cereal Supply and Demand Brief pointed to improving prospects for the 2016 wheat harvest in the EU, Russia and Ukraine. It forecast world cereal grain production at 2.526 billion tonnes, roughly the same as 2015 and the second-largest crop ever. Consumption is forecast to rise by a minor 1.1 percent, mostly due to slower growth in livestock feeding, so there will be a modest decline in world stockpiles in the coming year. “World trade in cereals is expected to decline slightly – to 367 million tonnes – with sharp drops in China’s imports of barley and sorghum as well as EU imports of maize, more than offsetting soaring imports of maize by drought-stricken countries in southern Africa,” said FAO.