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The benchmark index of international food prices rose in April for the first time in a year, driven by increases in world quotations for sugar, meat and rice, the United Nations Food and Agriculture Organization (FAO) reported on 05.05.2023.

The FAO's food price index, which tracks monthly changes in international prices of commonly traded food products, averaged 127.2 points in April, up 0.6 per cent from March.

At that level, the index was 19.7 per cent below the April 2022 level, but still 5.2 per cent higher than in April 2021.

The FAO sugar price index rose 17.6 per cent from March, reaching its highest level since October 2011, reflecting lower production expectations and results in India, China, Thailand and the European Union due to dry weather conditions and a slow start to the sugarcane harvest in Brazil, along with higher international crude oil prices, which may increase demand for sugarcane-based ethanol.

FAO's meat price index rose 1.3% during the month, mainly due to higher quotations for pork, followed by poultry prices, which rose due to Asian import demand and production cuts due to animal health issues. International beef prices also increased due to a drop in slaughter cattle supply, especially in the United States.

Meanwhile, price indices for other major food categories, except rice, continued to fall.

The FAO grain price index fell 1.7 per cent from March, averaging 19.8 per cent below the April 2022 value. International wheat prices fell 2.3 per cent, mainly due to large export opportunities in Australia and the Russian Federation. World maize prices fell 3.2 per cent as supply in South America increased seasonally with ongoing harvests. Amid smaller harvests due to higher input costs and adverse weather conditions, especially outside Asia, sales to Asian buyers boosted international rice prices.

"It is important that we continue to closely monitor price trends and the reasons for price increases. As economies recover from a significant slowdown, demand will increase, putting upward pressure on food prices," said FAO chief economist Maximo Torero. "At the same time, the rise in rice prices is extremely worrying and it is essential to renew the Black Sea Initiative to avoid other spikes for wheat and maize," he added.

The FAO vegetable oil price index fell 1.3 per cent this month, recording its fifth consecutive monthly decline. World palm oil prices remained stable, while soybean, rapeseed and sunflower oil quotations fell in line with seasonal harvest pressure from a possible record soybean harvest in Brazil.

The FAO Dairy Price Index fell 1.7 per cent, driven by continued weak global import demand for milk powders and higher cheese export availability in Western Europe.

Updated production and trade forecasts

In a new Cereal Supply and Demand Brief, also published on 05.05.2023, FAO updated its forecast for world wheat production for 2023. Global production is now estimated at 785 million tonnes, the second largest ever, but lower than last season, mainly because Australia and the Russian Federation produced less than in 2022.

For maize, Brazil's production is expected to reach a record high, while Argentina's is expected to fall below average due to prolonged dry conditions and heat waves. Favorable weather conditions have boosted yield expectations in South Africa, where the second-highest harvest ever is expected.

Meanwhile, the outlook for rice production in 2023/24 along and south of the equator is mixed, largely due to the regionally varying effects of La Niña. Going forward, the possible emergence of the El Niño phenomenon during the northern hemisphere summer will need to be closely monitored.

The FAO raised its earlier forecast for world grain trade in 2022/23 to 472 million tonnes, now some 2.2 per cent below the previous season's record level. World trade in wheat is expected to increase by 2.3 per cent, while world trade in coarse grains is likely to fall by 5.5 per cent. International trade in rice is expected to contract by 4.4 per cent year-on-year in 2023.

In 2022/23, world cereal consumption is expected to reach 2 780 million tonnes and world end-of-season stocks will reach 855 million tonnes. Based on these latest projections, world cereal stocks would reach 29.8 per cent in 2022/23, down slightly from 30.8 per cent in the previous 12 months, but still a relatively comfortable global supply, FAO said.

So what exactly does this report say and what does it not say ( but for a good listener sure does between the lines )?

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