The United Nations underlines the sufficient availability of wheat supplies, which pegs prices at a record high, even as it cut its world its world production forecast and was shown that cereal prices have risen at their fastest pace in three years.
The U.N. food agency, the Food and Agriculture Organization, lowered by 3.3 million tons to 739.9 million tons its forecast for world wheat production in 2018-2018, acknowledging the intermittent dryness in Europe but not high profile drought in North America which has sent spring wheat production forecasts tumbling.
“The downward revision is almost entirely on account of smaller crops in the European Union and Ukraine, where dry conditions are expected to reduce yields” the FAO said.
Although the estimate for wheat inventories by the end of the season was down by 1.6 million tons to 255.8 million tons, this remains a record high, and a rise of 6.7 tons year on year.
The drought-tested U.S. spring wheat crop, the highest protein variety, was overnight rated at just 37% “good” or “excellent”, dropped by 3 points on weekly comparison and the lowest early July reading on data tracing back to 1995.
However, the analysis of a strong supplies contrasted with market behavior, with FAO food price data showing that cereals values rose VT 4.2% last month - the quickest pace since March 2014.
Dairy prices rose even faster by 8.3% to trade in their highest levels since July 2014, which was led by a 14.1% increase in butter values to a record high.