No.3  July 2008  
   Crop Prospects and Food Situation

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Countries in crisis requiring external assistance1 (total: 34 countries)

Food Emergencies Update

Global cereal supply and demand brief

Policy measures taken by governments to reduce the impact of soaring prices

FAO global cereal supply and demand indicators

FAO food price indices

Regional reviews

Special feature: Zimbabwe

Statistical appendix


FAO food price indices

 The FAO Food Price Index averaged 216 in June 2008, virtually unchanged from May as reductions in meat and dairy prices were offset by increases in export prices of cereals as well sugar and vegetable oils. At its June 2008 value, the FAO food price index was below its peak in March, but still be 44 percent above the June 2007 level.

 The FAO Cereal Index averaged 274 in June, slightly higher than in May, driven by record maize prices, following reports of cuts in plantings and flood damage in the United States, the world’s largest producer and exporter of maize. The maize price strength also pushed up wheat prices while rice quotations tended to weaken as new crops were harvested in exporting countries. The index has gained 16 percent since January and is now 75 percent above the value in June last year.

 The FAO Oils/Fats Index averaged 283 in the second quarter of 2008, respectively 76 percent and 151 percent above the corresponding values in 2007 and 2006. Steady expansion in the demand for vegetable oils and fats combined with slow production growth has led to a tightening of global supplies, thus pushing up prices. After a relative stabilization in April and May 2008, the index resumed growth in June, reaching a new record of 292 points, as prospects for a marked recovery in global oilseed production in 2008/09 have diminished. New price hikes for maize and crude oil are also contributing to the strengthening in prices for oilseeds and derived products.

 The FAO Meat Index has risen considerably since the beginning of 2008 but showed signs of weakening between May and June when it fell to 135. While strong demand and high feeding costs have contributed to the rise in meat prices, increased slaughtering rates are expected to put prices under pressure at least in the short-term.

 The FAO Dairy Index averaged 263 in June, which is 4 percent higher than in June 2007, but down 13 percent from its peak in November 2007, reflecting a weakening of import demand following production increases in traditional importing countries. Uncertainty remains concerning the export supplies from Oceania, which is containing the drop in milk product prices.

 The FAO Sugar Index in the first six months of 2008 averaged 161, up 25 percent from the corresponding value in 2007. After increasing through February, prices came down considerably in April and May, but regained some momentum in June mainly because of the anticipated lower world sugar production in the 2008/09 season.

Crop Prospects and Food Situation


Crop Prospects and Food Situation


FAO Food Price Index
  Food Price Index 1 Meat 2 Dairy 3 Cereals 4 Oils and Fats 5 Sugar 6
2000 921001068572105
2001 941001178772111
2002 939686959188
2003 1021051059910591
2004 11411813010811792
2005 117121145105109127
2006 127115138123117190
2007 156121247169174129
2007 June 150120252156170119
 July 155120277157175131
 August 161123287168181126
 September 170124290192190125
 October 174122297198202128
 November 180126302200221130
 December 186123295220226137
2008 January 196126281236250154
 February 215128278279273173
 March 218132276278285169
 April 215132266279276161
 May 216141265271280155
 June 216135263274292156
1 Food Price Index: Consists of the average of 6 commodity group price indices mentioned above weighted with the average export shares of each of the groups for 1998-2000: in total 55 commodity quotations considered by FAO Commodity Specialists as representing the international prices of the food commodities noted are included in the overall index.2 Meat Price Index: Consists of 3 poultry meat product quotations (the average weighted by assumed fixed trade weights), 4 bovine meat product quotations (average weighted by assumed fixed trade weights), 3 pig meat product quotations (average weighted by assumed fixed trade weights), 1 ovine meat product quotation (average weighted by assumed fixed trade weights): the four meat group average prices are weighted by world average export trade shares for 1998-2000.3 Dairy Price Index: Consists of butter, SMP, WMP, cheese, casein price quotations; the average is weighted by world average export trade shares for 1998-2000.
4 Cereals Price Index: This index is compiled using the grains and rice price indices weighted by their average trade share for 1998-2000. The grains Price Index consists of International Grains Council (IGC) wheat price index, itself average of 9 different wheat price quotations, and 1 maize export quotation; after expressing the maize price into its index form and converting the base of the IGC index to 1998-2000. The Rice Price Index consists of three components containing average prices of 16 rice quotations: the components are Indica, Japonica and Aromatic rice varieties and the weights for combining the three components are assumed (fixed) trade shares of the three varieties.
5 Oils and Fats Price Index: Consists of an average of 11 different oils (including animal and fish oils) weighted with average export trade shares of each oil product for 1998-2000.
6 Sugar Price Index: Index form of the International Sugar Agreement prices with 1998-2000 as base.

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