Food Outlook report expects food supply and demand to remain basically balanced in the coming year
The latest Food Outlook report published by the UN Food and Agriculture Organization on October 6 points out that, given the relatively low and stable prices of agricultural products with the largest international trading volumes, the global food market will remain "basically balanced" in the coming year.
The report points out that global cereal production in 2016 will rise by 25.69 trillion tonnes, up 1.5% year on year, enough to further increase existing stocks. At the same time, the total value of food imports this year, calculated in US dollars, is expected to fall by 11%, to 1.168 trillion US dollars, with the decline in spending on livestock products and cereals far offsetting the increase in spending on fish, fruits and vegetables, oils and sugar.
The report raises its forecast for global wheat production to 7.424 trillion tonnes, with the largest increases in India, the United States and Russia, which is expected to replace the EU as the largest grain exporter. At the same time, global rice production is expected to achieve its first increase in 3 years, rising 1.3% to a record high of 4.978 trillion tonnes, mainly thanks to abundant monsoon rains in Asia and a relatively large production increase in Africa. Cereal prices are moving lower on expectations of ample supply. Since the beginning of this year, the futures prices of wheat and corn on the Chicago Board of Trade have both fallen by more than 16%, while rice quotations have dropped to their lowest level since early 2008.
The report also points out that, due to record production in the United States, the output of oilseed crops such as soybeans is expected to reach a new high this year. As for the livestock sector, after a relatively long period of oversupply, the dairy market will also return to balance in overall supply and demand in 2016, but tight milk supplies in the EU triggered the largest monthly increase in dairy prices in many years. In addition, world meat production has stagnated this year, and international demand for pork and poultry, especially demand in the East Asian market, has continued to support prices. At the same time, global fishery production this year is expected to increase by 1.8%, to 1.74 trillion tonnes, and aquaculture production is expected to expand by 5%, but due to the impact of El Nino on Pacific sardines, anchovies and squid, wild fish catches will decrease by 0.9%.
The UN Food and Agriculture Organization also released the "Global Food Price Index", saying it averaged 170.9 points in September, up 2.9% from August and up 10% from the same period last year. The main reason for the increase was that the FAO dairy price index rose 13.8% month on month, partly because of a sharp increase in butter prices that benefited EU exporters, as its dairy production increasingly declined. The FAO Food Price Index is a trade-weighted index of the prices of five major food commodity groups on the international market, and is currently at its highest level since March 2015.