World food prices have risen again, but a report from the UN Food and Agriculture Organisation suggests 2016 could be the second largest global harvest ever.
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Global food prices rose again in March, marking a third consecutive monthly increase after four years of decline. Palm oil led price increases in April, according to the UN Food and Agriculture Organisation (FAO), which monitors prices through its Food Price Index.
The Rome-based FAO noted a 0.7 percent increase in prices between March and April, though the Food Price Index remains 10 percent below its level of this time last year.
The reasons behind the rises seen this year are something of a patchwork; whilst palm oil prices were behind April’s slight increase, with higher cereal prices also playing a part, sugar prices which rocketed in March dropped back again last month.
FAO said the state of its FPI reflects ample food supplies, a slowing global economy and a stronger U.S. dollar.
In April, veg oil prices rose by 4.1 percent, due to reduced palm oil production, and cereal prices rose 1.5 percent on the month, due primarily to international maize quotations, linked to a weaker U.S. dollar and spillover from the oilseeds complex.
Dairy prices fell further still, dropping a further 2.2 percent. Across Europe, farmers are still seeing price cutbacks, whilst cheese and butter stocks in major exporting countries continue to grow.
Despite the rise in prices, FAO raised its forecast for world cereal production in 2016. The slight increase brings the predicted cereal harvest to 2,526 million tonnes, virtually the same as in 2015 and potentially on course to being the second-largest global harvest ever.
In a separate report - the Cereal Supply and Demand Brief, released on Thursday - FAO said improved prospects for wheat production stem from favourable winter conditions in Europe and Russia. However, at 717 million tonnes, the 2016 wheat output forecast remains 16 million tonnes short of last year's record.
World cereal use in the season ahead is expected to rise by only 1.1 percent due to slower growth in the use of cereals - especially wheat and barley - as livestock feed. As a result, world cereal stocks are likely to drop by 3.3 percent or 21 million tonnes over the course of the new season.
World trade in cereals is expected to decline slightly - to 367 million tonnes - with sharp drops in China's imports of barley and sorghum as well as EU imports of maize, more than offsetting soaring imports of maize by drought-stricken countries in southern Africa. ■