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Global Food markets on Stable Path - FAO

Dairy prices are projected to remain weak, while fish prices appear poised to remain contained due to a vibrant aquaculture production. Meat production in general is expected to be stable although poultry output - largely for export - is forecast to grow.
Global food commodity markets are on a stable path for the year ahead, with solid production prospects and abundant stocks pointing to a broadly stable outcome for prices and supplies, the Food and Agricultural Organisation says.

Lower food prices than last year means that the world's food import bill could fall to 986 billion US Dollars this year - below 1 trillion US Dollars for the first time since 200.

The projections are featured in FAO's biannual Food Outlook, a publication focusing on developments affecting global food and feed markets. It focuses on developments in international markets, with comprehensive assessments and forecasts on a commodity by commodity basis.

The May-June outlook shows that Wheat production in 2016 will outstrip utilization for the fourth year in a row, boosting inventories of the world's most important cereal to a 15-year high, with major surges in China and the United States.

Total wheat utilization will actually decline marginally as more of the world's farmer's turn to maize to feed their livestock.  That's an increasingly popular option in China, where the government's decision to lower maize reserves is expected to boost consumption of that coarse grain.  China's move should have important effects on international markets, leading to sharp declines in demand for barley and sorghum.

Decisions to release government stockpiles may also affect rice prices, which began to stabilize in late 2015 after a prolonged decline, and even rebounded in May.

Dairy prices are projected to remain weak, while fish prices appear poised to remain contained due to a vibrant aquaculture production. Meat production in general is expected to be stable although poultry output - largely for export - is forecast to grow.

Upward price pressures do exist for vegetable oils as soy output in South America and palm oil in Southeast Asia were subject to heavy losses in the wake of El Niño and production prospects have deteriorated. Global palm oil output is expected to shrink for the first time in 18 years, FAO said.

Also released today was an updated FAO Food Price Index, which rose in May for the fourth month in a row, increasing by 2.1 percent from April to 155.8 points - still some 7 percent below the level reported one year ago.

Prices rose across the index - a trade-weighted index tracking international market prices for the cereals, vegetable oils, dairy, meat and sugar commodity groups - with the exception of vegetable oils, which subsided after a strong hike in April.

The FAO Sugar Price Index led the increase, surging 11.7 percent from the previous month, as deteriorating production prospects in India, the world's number two sugar producer, outweighed a bumper crop and large export availability in Brazil, the leading producer.

At the same time, the forecast for global cereal stocks was raised to 642 million tonnes - less than two million tonnes below their all-time high, driven by a historical revision to China's wheat inventory.

Global trade in cereals is predicted to decline by 1.9 percent from the previous year to 369 million tonnes. The contraction "is likely to intensify competition for market share among major exporters, a prospect that could keep international prices in check," FAO said.

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