FAO Food Price Index down in January led by lower wheat and maize prices

Coarse grain production is on track to hit an all-time high, pushing up overall supply and trade prospects

The benchmark for world food commodity prices fell further in January, albeit slightly, led by decreases in the prices of cereals and meat, which more than offset an increase in sugar prices, the Food and Agriculture Organisation of the United Nations (FAO) reported.

The FAO Food Price Index, which tracks monthly changes in the international prices of a set of globally traded food commodities, averaged 118 points in January, down 1 per cent from December and 10.4 per cent from its corresponding value a year ago.  

The FAO Cereal Price Index declined by 2.2 per cent from the previous month. Global wheat export prices declined in January driven by strong competition among exporters and the arrival of recently harvested supplies in the southern hemisphere countries, while those of maize fell sharply, reflecting improved crop conditions and the start of the harvest in Argentina and larger supplies in the United States of America. By contrast, price quotations for rice rose 1.2 per cent in January, reflecting a strong export demand for Thai and Pakistani higher-quality Indica rice and additional purchases by Indonesia.

The FAO Vegetable Oil Price Index rose marginally by 0.1 per cent from December – but was still 12.8 per cent lower than a year earlier – reflecting moderate increases in international palm and sunflower seed oil prices offsetting declines in the prices of soy and rapeseed oils. World palm oil prices were driven by seasonally lower production in major producing countries and concerns over unfavourable weather conditions in Malaysia. Meanwhile, increased import demand slightly pushed up sunflower seed oil prices. By contrast, international soy and rapeseed oil prices declined on account of prospects for large supplies from South America and lingering ample availabilities in Europe, respectively.

The FAO Dairy Price Index remained virtually unchanged from its revised December value, standing 17.8 per cent below its value a year ago. In January, international price quotations for butter and whole milk powder increased largely due to higher demand from Asian buyers, nearly offsetting declines in those for skim milk powder and cheese.

The FAO Meat Price Index declined for the seventh consecutive month by 1.4 per cent from December, as abundant supplies from leading exporting countries drove down international prices of poultry, bovine and pig meats. By contrast, international ovine meat prices increased on high global import demand and lower supplies of animals for slaughter in Oceania.

The FAO Sugar Price Index in January was up 0.8 per cent from the previous month, underpinned by concerns over the likely impact of below-average rains in Brazil on sugarcane crops to be harvested from April, coupled with unfavourable production prospects in Thailand and India.

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