January sees continued decrease in world food price index: FAO
Published on: February 10, 2024.
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Rice Exporters Experience Decrease in Food Commodity Prices
The Food and Agriculture Organization of the United Nations (FAO) has reported a slight decrease in the benchmark for world food commodity prices in January. This decrease was primarily driven by lower prices in cereals and meat, although sugar prices saw an increase. The FAO Food Price Index, which tracks changes in international prices of globally-traded food commodities, averaged 118 points in January, down 1 percent from December and 10.4 percent from the previous year.
Declines in Cereal and Meat Prices
The FAO Cereal Price Index dropped by 2.2 percent in January. This decline can be attributed to increased competition among wheat exporters and the arrival of recently harvested supplies in southern hemisphere countries. Additionally, maize prices fell significantly due to improved crop conditions and the start of the harvest in Argentina, as well as larger supplies in the United States.
On the other hand, rice prices experienced a 1.2 percent increase in January. This rise can be attributed to strong export demand for Thai and Pakistani high-quality Indica rice, as well as additional purchases by Indonesia.
Moderate Increase in Vegetable Oil Prices
The FAO Vegetable Oil Price Index saw a marginal increase of 0.1 percent in January. Although this increase is minimal, it is still 12.8 percent lower than the previous year. The increase can be attributed to moderate increases in international palm and sunflower seed oil prices, which offset declines in soy and rapeseed oil prices.
World palm oil prices were driven by lower seasonal production in major producing countries and concerns over unfavorable weather conditions in Malaysia. Sunflower seed oil prices also rose slightly due to increased import demand. Conversely, soy and rapeseed oil prices declined due to the anticipation of large supplies from South America and Europe.
Steady Dairy Prices
The FAO Dairy Price Index remained relatively unchanged from the previous month, standing at 17.8 percent below its value from the previous year. While butter and whole milk powder prices increased due to higher demand from Asian buyers, declines were seen in skim milk powder and cheese prices.
Continued Decline in Meat Prices
The FAO Meat Price Index decreased for the seventh month in a row, dropping by 1.4 percent in January. Abundant supplies from leading exporting countries led to lower international prices for poultry, bovine, and pig meats. However, ovine meat prices increased due to high global import demand and lower supplies for slaughter in Oceania.
Increase in Sugar Prices
The FAO Sugar Price Index saw an increase of 0.8 percent in January. This increase was driven by concerns over below-average rains in Brazil, which may impact sugarcane crops to be harvested from April. Unfavorable production prospects in Thailand and India also contributed to the rise in sugar prices.
Record Cereal Output Forecasted
The latest Cereal Supply and Demand Brief, released on Friday, forecasts that world cereal production in 2023 will reach a record high of 2,836 million tonnes. This represents a 1.2 percent increase from 2022. The global coarse grain output is also projected to hit an all-time high of 1,523 million tonnes.
The increase in production is attributed to higher yields and larger harvested areas than previously anticipated in Canada, China, Türkiye, and the United States. As a result, the global cereal stocks-to-use ratio for 2023/24 is expected to reach a comfortable level of 31.1 percent.
Despite these positive projections for cereals, world trade in wheat and rice is expected to decrease in 2023/34, while trade in coarse grains is anticipated to increase, projecting a rise in overall global trade of cereals.
