World food prices rise, led by cereals and vegetable oils, says FAO

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World food prices rose for a fourth month running in September, led by strong increases for cereals and vegetable oils, the United Nations food agency said on Thursday.

The Food and Agriculture Organization’s food price index, which measures monthly changes for a basket of cereals, oilseeds, dairy products, meat and sugar, averaged 97.9 points last month versus a downwardly revised 95.9 in August.

The August figure was previously given as 96.1.

The Rome-based FAO also said in a statement that worldwide cereal harvests remained on course to hit an annual record in 2020, even though it slightly trimmed its previous forecasts.

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The agency’s cereal price index rose 5.1 percent in September from the month before and 13.6 percent above its value a year earlier.

“Higher wheat price quotations led the increase, spurred by brisk trade activity amid concerns over production prospects in the southern hemisphere as well as dry conditions affecting winter wheat sowings around Europe,” FAO said.

Maize, sorghum and barley prices rose, while rice fell 1.4 percent as fresh demand slowed.

The vegetable oil price index climbed 6.0 percent month-on-month, thanks largely to rising palm, sunflower seed and soy oil quotations, reaching an 8-month high.

The dairy index was little changed on the month, with moderate increases in price quotations for butter, cheese and skim milk powder offset by a fall in those of whole milk powder.

Average sugar prices fell 2.6 percent from August, reflecting expectations of a global production surplus for the new 2020/2021 season.

The meat index dipped 0.9 perent month-on-month and was down 9.4 percent year-on-year, with quotations for pig meat dropping on the back
of China’s move to ban imports from Germany following the detection of African swine fever in Europe’s largest economy.

FAO revised down its forecast for the 2020 cereal season by 2.5 million tons, reflecting lower expectations for the output of global coarse grains.

However, despite this reduction, the agency still expected a record harvest this year of 2.762 billion tons, up 2.1 percent on 2019 levels.

The forecast for world cereal utilization in 2020/21 was put at 2.744 billion tons, down 2.8 million tons since September, but still 54.5 million tons above the 2019/20 estimate. The forecast for world cereal stocks by the close of seasons in 2021 was 890 million tons, down 5.9 million tons
from the previous estimate but still representing a record high.

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