Miller Magazine Issue: 113 May 2019

88 MARKET ANALYSIS MAY 2019 World food prices rose to their highest levels in nearly a year in April, climbing 1.5 percent compared to March, with four of five components in the index rising com- pared to the previous month. The index, released by the United Nations Food and Agriculture Organization (FAO), has now climbed every month this year. The last time the index was this high was in June 2018. FAO also issued its first forecast for global cereal produc- tion this year, seeing a record output for 2019 following a decline in 2018. In its first forecast for 2019, FAO pre- dicted world cereal production would come in at a re- cord 2.722 billion tons this year, up 2.7 percent on 2018 levels, when output declined. “Among the major cereals, wheat, maize and barley would account for most of the rise in cereal production, with projected year-on-year increases of 5.0 percent, 2.3 percent and 5.4 percent, respectively,” FAO said. For the fourth consecutive month, dairy prices climbed the most, adding 5.2 percent a month after rising 6.2 percent. FAO said dry weather in Australia and New Ze- aland drove prices higher, with distributors stocking up on butter, whole milk powder, and cheese rose in antici- pation of tightening supply chains. Vegetable oil prices climbed 1.1 percent pushed by the rise of palm and soybean oil prices. Meats were 3.0 per- cent higher, pushed by pig meat prices, which rose on higher demand from China. Sugar prices rose modestly, climbing just 0.8 percent based on a rise in biofuel pro- duction in Brazil, the world’s top producer of sugar. Prices for rice and cereals, the biggest component in the FAO index, were the only sector to see a drop in pri- ces, falling 2.8 percent to below its level a year earlier. FAO said wheat prices led the fall, with corn prices fi- nishing the month only marginally lower and rice prices holding steady compared to March. The sub-index fell for the fourth consecutive month, pressured by large export availabilities and slowing trade. Among the ce- reals, wheat prices fell the most in April, influenced by prospects for a strong rebound in the 2019 production, amid large exportable supplies. Maize prices were also lower, mostly because of expectations of larger South American crops. FAO Food Price Index reaches highest level in 10 months