ISLAMABAD: The World Bank says that global agricultural prices are forecast to recede modestly in 2017, but will largely stabilise in 2018, while most food markets are well-supplied and the stock-to-use ratios of some grains are forecast to reach multi-year highs.

According to the ‘Commodity Markets Out­look’ released on Thursday, grain prices are projected to remain broadly stable in 2017 but are anticipated to increase one per cent in 2018 because of a projected tightness in maize supplies.

Over the medium term, agricultural commodity prices are expected to increase only a cumulative 3pc through 2020, a very small gain compared to the post-2011 decline, the World Bank report says.

It says that disruptive weather at a global level is not expected, and earlier fears in the year of a La Niña cycle have not materialised. Subsidies to crop producers facing lower prices were isolated events and did not skew prices at a global level. The impact of bio-fuel production, which had a major effect on prices during the boom years, is diminished as well. Fertiliser prices are expected to strengthen 3pc on moderate demand growth, but new capacity could weigh on prices.

The report says that global production of wheat, which has been revised upward throughout the crop season, is projected to reach 751 million metric tonnes, marginally lower than last season’s 754m metric tonnes, according to the US Department of Agriculture (USDA).

Conditions for the global wheat crop are generally favourable. All three Central Asian wheat producers (Kazakhstan, Russia, and Ukraine) experienced favourable weather conditions, while the winter crops in North America and the Southern Hemisphere proceed as expected.

With global wheat consumption projected to remain largely unchanged from last season, the stocks-to-use ratio for wheat is forecast to exceed 36pc, 3-decade high.

Maize production is projected to decline more than 3pc this season. Although crop conditions in the US, the world’s top maize supplier, are favourable, dry conditions are causing concern in the European Union and Ukraine.

In Argentina and Brazil, global maize consumption is anticipated to expand 2pc, pushing the stocks-to-use ratio to 19pc, 3 percentage points below last season but much higher than the 2010-12 lows.

Rice production is expected to recede marginally to 489m metric tonnes in 2017-18 mainly in response to mixed growing conditions in some Asian producers, notably China, northern Thailand, and Vietnam.

The oilseed supply outlook during October 2017-September 2018 is also healthy, with global supplies for the ten major oilseeds projected to reach a new high of 562m metric tonnes.

A small drop in soybean production is expected to offset increases in cottonseed, palm kernels, and rapeseed.

The agricultural price outlook assumes that bio-fuels will be a source of demand for key food commodities. Bio-fuels currently account for a little over 1.5mbpd, or 1.6pc of global liquid energy consumption.

Most bio-fuel production is not profitable at current energy and agricultural prices, is supported through various forms of mandates and trade measures. Bio-fuels come principally in the form of maize-based ethanol from the US, sugarcane-based ethanol from Brazil, and edible oil-based biodiesel from Europe.

Published in Dawn, October 29th, 2017