The United Nations raised further its estimate for the world wheat harvest this year, reducing the gap last year’s record high, citing improved prospects for European Union output.
The UN’s Food and Agriculture Organization (FAO) nudged higher by 2m tonnes to 722m tonnes its estimate for world wheat production this year, leaving the forecast just 1% lower than the record 2014 harvest of 728.2m tonnes.
The FAO upgrade takes its estimate even further above forecasts from commentators such as AAFC, the Canadian agriculture ministry, which has pegged the world harvest at 710m tonnes, and the International Grains Council, which has forecast a 708m-tonne crop.
The agency flagged “improved prospects” for the European Union harvest, the world’s biggest, which is seen falling just 1% year on year, compared with a 5.5% decline to 147.0m tonnes expected last month.
“Improved weather has also raised crop prospects in China, India and Pakistan, which are all anticipated to harvest close to last year’s record levels,” the FAO said.
Canada, US up, Russia, Ukraine down
For Canada, “wheat production is forecast to expand by nearly 3%”, representing a small upgrade on a previous forecast of a 2.4% increase.
The rise in US output was kept at some 2%.
However, the organisation remained cautious over harvest prospects in the former Soviet Union, where growers face high borrowing costs and, thanks to weak currencies, elevated cost of imported seed, sprays and fertilizer.
“In the Russian Federation and Ukraine, production is predicted to decline from last year’s above-average level, as high input costs are anticipated to cause a reduction of both plantings and yields,” the FAO said.
Sugar leads price fall
The comments came as the group said that its food price index, which tracks the global prices of major food groups, had fallen by 1.5% last month to its lowest point since June 2010.
The drop was led by a 9.2% tumble in sugar prices to the lowest since February 2009, with last month’s fall attributed to “improved crop prospects in major sugar producing countries, in particular Brazil, the world’s largest producer and exporter of sugar”, with weakness in the real contributing too.
Cereals prices fell by 1.1% to their weakest since July 2010, the FAO said, highlighting “strong export competition” in wheat and corn markets.
“After a short-lived increase towards the end of 2014, the [cereals price] index has been falling since the start of 2015, as large export supplies weighed on international prices.”
However, dairy prices rose 1.7% month on month.
“Limited export supplies in Oceania and Europe was the principal cause of the reversal of the falling world dairy price trend that prevailed between March 2014 and January 2015,” a period during which prices fell by one-third on FAO estimates.
(Source – http://www.blackseagrain.net/novosti/un-lifts-world-wheat-harvest-hopes-citing-eu-prospects)