The Food and Agriculture Organization (FAO) of the United Nation's says it expects less price volatility than in recent years in commodity markets due to a rebuilding of global cereal stocks. The group's Food Price Index rose slightly in October to 205.8 points, which is still 11 points below year-ago. The slight increase was driven by a surge in sugar prices, although most other commodity prices also posted gains.
"The prices for most basic food commodities have declined over the past few months. This relates to production increases and the expectation that in the current season, we will have more abundant supplies, more export availabilities and higher stocks," said David Hallam, Director of FAO's Trade and Markets Division.
FAO raised its 2013-14 global cereal grains forecast nearly 10 MMT from last month to 2.498 billion MT. FAO's global cereal grains stocks forecast was increased by 5 MMT from October to 564 MMT, which is 13% higher than 2012-13. The sharp increase in 2013 cereal production mostly stems from a recovery corn crops in the U.S. and record wheat harvests in CIS countries. The expansion in world cereal stocks would result in the global cereal stocks-to-use ratio reaching 23%, well above the historical low of 18.4% in 2007-08.