Food prices recorded their biggest rise in three years, led by the biggest surge in sugar values since 2010, the United Nations said, even as it raised further expectations for wheat inventories.
Food prices increased by 3.9% in October, the biggest month-on-month rise since February 2012, the UN food agency, the Food and Agriculture Organization said, attributing the increase largely to “weather-driven concerns about sugar and palm oil supplies”.
Indeed, values of vegetable oils gained 6.2%, their best performance in nearly five years, “as concerns intensified about El Niсo compromising next year’s [palm oil] production in South East Asia – in Indonesia in particular,” the FAO said.
Palm oil prices have more recently also found support in ideas of raised biodiesel blending mandates in Indonesia bearing fruit, with state-owned Pertamina saying it will not import gas oil in 2016 thanks to raised supplies of the biofuel, which is made from vegetable oils.
‘Reports of crop damages’
Sugar prices soared 17.2% last month, also the biggest increase in five years, reaching an eight-month high, boosted by rain delays to cane harvesting in Brazil’s key Centre South region.
“Reports of crop damages caused by excessive dryness in India, Thailand, the Philippines, South Africa and Vietnam provided further support to international sugar prices,” the agency said.
Cereals prices showed a 1.7% increase, with wheat values lifted by “concerns about dryness affecting winter wheat in some countries and deteriorating production prospects in Australia”.
The FAO also noted a boost to corn values from an unwillingness of US producers to sell at current levels, although the price gains in these grains was in part offset by a drop in rice values “as a result of marked declines in the fragrant and Japonica rice segments”.
The agency cut its forecast for world production of grains, including rice, this year by 4.7m tonnes to 2.53bn tonnes, reflecting in the main “less buoyant expectations” for corn output in Asia and Ukraine thanks to dry weather.
In Asia, “the decrease mainly concerned India, reduced by 1m tonnes, to reflect lower-than-previously anticipated plantings for the kharif corn crop, and unfavourable rains,” the FAO said.
However, the estimate for wheat production was raised by 1.4m tonnes to 736.2m tonnes, “some 3m tonnes above the 2014 record”.
The revision reflected in the main a higher forecast for the European Union wheat harvest, the world’s biggest, which has been upgraded by other commentators recently too.
The European Commission earlier this week raised its forecast for the soft wheat crop by 4.6m tonnes to 149.2m tonnes, ahead of last year’s record 148.7m-tonne result, with durum representing a further 8.4m tonnes on top.
While the FAO said that some of the extra world wheat output would be accounted for by increased consumption, it raised its forecast for carryout stocks this season to 207.4m tonnes, up 4.8m tonnes year on year, and “the highest in 15 years”.
Last month, it forecast carryout stocks at 205.9m tonnes, “their highest level in 13 years”.
(Source – http://www.agrimoney.com/news/food-prices-rise-at-fastest-in-three-years-says-un–8974.html)