Led by “much weaker” vegetable oil, dairy, and grain prices, the UN Food and Agriculture Organization’s index of global food prices fell to its lowest level since May 2016. Vegetable oil prices sank to their lowest level in 12 years under the weight of abundant supplies of soy, sunflower, and palm oil, said the FAO on Thursday.
The FAO’s Food Price Index, based on a basket of five food commodities, is 8.5 percent lower than a year ago. The dairy component of the index has declined for six months in a row and is down by 18 percent since May. Cereal grain prices are 7 percent lower than they were a year ago in the face of large supplies of export wheat, rising competition in the world corn market, and falling rice prices as a new crop came on the market.
In a companion report, the FAO lowered its estimate of the world wheat crop to 725 million tonnes, or 4.6 percent below the 2017/18 crop, and said world grain production, including wheat, would be 2.4 percent smaller than the previous crop. The global rice crop, however, would set a record of 512 million tonnes. Strong grain demand by livestock feeders and industrial users for wheat and corn will help reduce the world stockpile by 6.5 percent from the record-large 815 million tonnes at the start of the current trading year.