FAO Food Price Index Rises; Cereals Crop Declines

October 4, 2012 01:34 AM

The Food and Agriculture Organization (FAO) of the United Nations says following two months of stability, the FAO Food Price Index rose 1.4% in September 2012. Meanwhile, the agency lowered its world cereals production forecast for 2012 down slightly to 2.286 billion metric tons (BMT) to reflect a smaller corn crop in central and southeastern Europe.

At the currently forecast level, world cereal production in 2012 would be 2.6% down from the previous year's record crop but close to the second largest in 2008. The overall decrease comprises a 5.2% reduction in wheat production and a 2.3% reduction for coarse grains.

FAO’s latest forecast for global wheat production in 2012 stands at 663 million metric tons (MMT), 5.2% below last year’s level, but close to the average of the past five years. "This level is considerably below expectations earlier in the year, largely reflecting the impact of the severe drought that set-in across eastern Europe and central Asia, but also on account of downward revisions for the key southern hemisphere producing countries where weather and policy factors in some cases have reduced prospects for the 2012 crop yet to be harvested," says FAO.

However, very early indications for wheat crops in 2013 are encouraging, with winter wheat planting in the northern hemisphere already well advanced under generally favorable weather conditions. "With current wheat prices higher than a year ago and utilization expected to outstrip production for the second year in succession in 2012/13, wheat remains an attractive option for producers," says FAO. "Thus, weather permitting, plantings are expected to at least match those of last year. This alone could result in a significant increase next year’s global wheat output, assuming growing season conditions return to normal in areas affected by drought in 2012, and satisfactory growing conditions in the other key producing countries."


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