International cereal prices

Export prices of wheat declined in July while those of rice increased. International prices of wheat which had fallen in May and June continued to decline in July. The benchmark US wheat price (No.2 Hard Red Winter, f.o.b.) averaged USD 308 per tonne, down 8 percent from its June level. Wheat prices remained 45 percent higher than a year earlier although they are 36 percent below their peaks in 2008. The decline in July mainly reflected pressure from the 2011 winter wheat harvest in the US and Europe, as well as large export availabilities expected in the Black Sea region in the 2011/12 marketing season.

Export prices of maize decreased somewhat in July, with the benchmark US maize price (Yellow, No. 2, f.o.b.) averaging USD 304 per tonne, still 89 percent above its level of a year ago. Maize prices declined in early July after the US revised upwards the estimates of their 2011 planted area and 2010/11 carryover stocks for maize. However, concerns about dry weather in the key growing areas of the US in the second half of the month provided support.

FAO’s latest forecast for world cereal production in 2011 stands at nearly 2 313 million tones, 3.3 percent higher than in 2010. This is 11 million tonnes more than the last forecast in Crop Prospects and Food Situation on 22 June and two million tonnes below the forecast published in Food Outlook on 7 June. These variations mainly stem from two consecutive revisions in United States crop forecasts in a matter of weeks. Based on the latest indications, global wheat output is expected to be 3.3 percent higher than last year’s reduced crop, mostly reflecting improved production prospects in the Commonwealth of Independent States – CIS (up 24 percent from 2010) and India (up 4 percent), more than offsetting reductions in the United States (down 8 percent) and in the EU (down 2 percent).  World production of coarse grains is forecast to increase by 3.5 percent (or 39 million tonnes), to a level surpassing the 2008 record. In the United States, the world’s largest producer, total coarse grain production is likely to exceed the 2010 level by at least 6.5 percent (or 22 million tonnes), coming close to the 2007 record. Higher production is also anticipated in the CIS and the EU. World paddy production is anticipated to expand by 2.7 percent in 2011 to a new high, sustained by gains in India (up 6 percent), as well as several other countries, such as China, Pakistan and Brazil. 

Eastern Africa

Prices of cereals have reached record levels in several countries and are in general well above their levels a year earlier, substantially reducing access to food by large numbers of population and aggravating the food insecurity in the subregion. The high level of prices is the result of a combination of factors including droughtreduced secondary season harvests earlier in the year, sharply increased fuel and transport costs, high international prices of

imported wheat, insecurity and concerns over the performance of the 2011 main cereal harvests in some countries.

Western Africa

Cereal prices increasing slightly or stable but at generally low levels. Overall, cereal prices are well below their levels of a year earlier reflecting adequate supplies from the 2010 harvests. However, higher fuel prices have resulted in price increases in some countries, notably Nigeria.

Southern Africa

In Southern Africa, maize prices showed mixed trends in July after dropping in the previous months corresponding with the peak of the harvest period and reflecting the generally good

crops that were being gathered throughout the subregion.

Far East

Rice prices moved upwards in several Asian countries in the past months. Prices increased particularly in the main exporting countries, Thailand and Viet Nam, supported by the prospect of changes in price policies in Thailand. Prices of wheat, which had shown declines in the previous months with the arrival of the 2011 harvests, also moved upwards in July in some countries, namely Afghanistan and Pakistan.

In China, wholesale prices of Indica and Japonica rice remained firm in July and were 25 and 12 percent respectively above their levels of a year ago. Retail prices of wheat flour have also remained stable averaging 17 percent more than in July 2010. Prices of pork meat, a key staple of the Chinese diet, hit a record level in July due to rising production costs and shortages in supply. The Government has announced plans to release supplies of pork into

the market in an attempt to reduce prices that are nearly 60 percent up compared to the same period in the previous year. Higher pork prices have been a major factor behind the accelerating rate of food inflation in the last few months.

CIS

Prices of wheat flour still at high levels despite ongoing harvests

In most countries of the subregion, wheat flour prices in July remained firm, or declined only slightly, despite the ongoing 2011 wheat harvests. In general, prices remained well above their levels at the same time last year. The subregion is heavily dependent

on imported wheat to cover its consumption requirements and higher transport costs following recent increases in Russian oil export fees are contributing to keep prices at high levels.

Latin America

White maize prices reached new peaks in Central American countries.In Central America, white maize prices further strengthened in July hitting new records. High international prices of yellow maize, which countries of the subregion import significantly, coupled with reduced domestic supplies following crop losses in 2010, continued to provide support. Prices are expected to decline from this month with the beginning of the main harvest.

The full report is available from the FAO here.