The United Nation's Food and Agriculture Organization (FAO) Food Price Index in November was virtually unchanged from its October level. At the new level of 215 points, the Index was 23 points, or 10%, below its peak in February 2011 but remained two points, or one%, above its level in November 2010.
The prices of cereals dropped by 3 points or 1% from October. The retreat was largely driven by wheat prices, which dropped 3%, while rice fell only slightly and coarse grain prices remained virtually unchanged. Still, the cereals index remained 6 points higher than in November 2010.
In it's quarterly Crop Prospects and Food Situation, FAO projects world cereal production at 2.323 million metric tons (MMT) for 2011, marginally lower than October's estimate, but still 3.5% higher than the previous year. "At this level, the 2011 cereal crop should be sufficient to cover the expected increase in utilization in 2011-12 and also allow for a moderate replenishment of world reserves," states the report.
Among cereals, global wheat output is expected to increase by 6.5%, while the forecasts for coarse grains and rice were reduced slightly due to a downward adjustment for maize in the United States and a deterioration of rice prospects in Indonesia.
Looking ahead to 2012, FAO says with current wheat prices similar to their levels a year ago and utilization expected to outstrip supply in 2011-12, the crop should remain an attractive option for producers. "As a result, farmers are expected to maintain, or even increase, the area planted to wheat," they state.
FAO’s latest forecast for world production of coarse grains in 2011 now stands at 1.147 MMT, 1.9% above the previous year’s level and virtually matching the record harvest in 2008. "The bulk of the increase is attributed to a strong recovery in Europe’s production, mainly in the European CIS countries, after the drought in 2010. However, larger coarse grain crops are also forecast for Asia and South America," it states.
Planting of the 2012 corn crop is already underway in the southern hemisphere, with farmers in Argentina and Brazil expected to expand sharply the area planted in response to strong demand and attractive price prospects," it states. "Maize (corn) planting is also starting in Southern Africa under mixed conditions: rainfall has been generally satisfactory across eastern parts of the subregion but completely lacking or below average so far elsewhere. In South Africa, the largest producing country in the subregion, preliminary planting intentions indicate a possible expansion of plantings in response to the prevailing relatively high maize prices compared to last year."