GLOBAL— The Food and Agriculture Organization (FAO) has projected that the world cereal production in 2021 will increase for the third consecutive year thanks to sharp rebounds in key production markets in Europe, India and South Africa.
According to the FAO, global wheat production is forecast to reach a new high of 785 million tonnes in 2021, up 1.4% from 2020, driven by a likely sharp rebound across most of Europe and expectations of a record harvest in India.
Above-average outputs also are expected for maize, with a record harvest anticipated in Brazil and a multi-year high in South Africa, according to the FAO’s Cereal Supply and Demand Brief.
As grain output rebounds, global cereal utilization is also expected to soar driven mainly by demand from China where the livestock sector is recovering from African swine fever.
The FAO notes that for the current 2020-21 marketing season, global cereal utilization is now forecast at 2,777 million tonnes, 2.4% higher than the previous year.
As a result, world cereal stocks at the end of 2021 are anticipated to decline by 1.7% from their opening levels to 808 million tonnes.
Combined with the utilization forecasts, the global cereal stock-to-use ratio for 2020-21 is foreseen to dip to a seven-year low of 28.4%.
FAO has since raised its forecast for world trade in cereals during 2020-21 to 466 million tonnes, a 5.8% increase from the previous year, driven by even faster trade in coarse grains linked to unprecedented levels of maize purchases by China.
The FAO also reported on April 8 that global food commodity prices rose in March, marking their tenth consecutive monthly increase, with quotations for vegetable oils and dairy products leading the rise.
Vegetable Oil Price Index rose 8% from the previous month to hit a nearly 10-year high, with soy oil prices rising sharply due in part to the prospects of firm demand from the biodiesel sector.
By contrast, the FAO Cereal Price Index dropped by 1.8%, but it is still 26.5% higher than in March 2020.
Wheat export prices declined the most, reflecting generally good supplies and favorable production prospects for 2021 crops. Maize and rice prices also declined, while those for sorghum rose.
The FAO Price Index hits a 7 year high
Other sectors covered in the FAO Price Index showed varied trends that were generally falling leaning on the price increase side.
For instance, the FAO Dairy price index increased 3.9% from February, with butter prices buoyed by somewhat tight supplies in Europe associated with increased demand in anticipation of a foodservice sector recovery.
The FAO Meat Price Index, on the other hand, appreciated by 2.3% from February, with imports by China and a surge in internal sales in Europe ahead of the Easter holiday celebration underpinning increasing poultry and pig meat quotations.
Bovine meat prices remained steady, while ovine meat prices declined as dry weather in New Zealand led to farmers offloading animals.
Overall, the FAO Food Price Index, which tracks monthly changes in the international prices of commonly traded food commodities, averaged 118.5 points in March, 2.1% higher than in February and reaching its highest level since June 2014.
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