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FAO Forecasts Global Food Prices to Decline

Russia’s wheat output is anticipated to set a new record.Russia’s wheat output is anticipated to set a new record.

Global food commodities prices are likely to remain subdued during the rest of the current calendar and the next year following a sharp upwards revision in their output forecasts by the global monitoring agency the Food and Agricultural Organization of the United Nations.

 FAO in its latest report has forecast global cereal output at 2,571 million tons for the calendar year 2016, 1.5% rise from their production reported in 2015, PTI reported.

Apart from cereals, the recovery in the output of crude palm oil across major producing states hint at its price decline in coming days. Rising sugar, dairy and cereal prices lifted FAO’s food price index by 0.7% to average at 172.6 points in October and 9.1% from a year earlier with the staple grains’ index rising for the first time in three months.

The forecast assumes significance as global experts eye better agro output following favorable monsoon rains after two years of subsequent drought and thereby lower production of agro commodities. Inflation, therefore, in many parts of the world remained a cause of concern for the respective governments to manage.

“Global cereal output may rise this year following plantings in additional area and satisfactory development of crops,” said FAO in its latest report.

The updated figure released by FAO showed a substantial upgrade of the outlook for world wheat production, which is now expected to rise to 746.7 million tons, a 4.3 million increase from FAO’s October forecast. The Russian Federation’s wheat output is now anticipated to set a new record, while favorable weather is also boosting yield prospects in Kazakhstan.

The increase in world wheat and barley production more than offsets the expected 4.8 million ton decline in the 2016 global maize crop due to weather-induced yield downgrades for Brazil, China, the European Union and the US.

The forecast for global rice production was largely unchanged. Early signs from the planting of the 2017 winter wheat crop in the northern hemisphere indicate that US farmers are reducing the area because of low price prospects and a subdued export outlook due to the stronger US dollar. However, wheat plantings in the Russian Federation and Ukraine are ahead of last year’s pace.

In fact, agro commodities prices have started softening in November after rising marginally in October. Prices of almost all global commodities declined by up to 5% in the first 10 days of November.

 

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