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Higher sugar, dairy, and vegetable oil prices drive the overall increase
The benchmark for global food commodity prices rose in February, propelled by increases in sugar, dairy, and vegetable oil prices, according to the new Food and Agriculture Organization of the United Nations (FAO) report.
The FAO Food Price Index, which tracks monthly changes in the international prices of a set of globally traded food commodities, averaged 127.1 points in February, up 1.6 per cent from the previous month and 8.2 per cent higher than its February 2024 level.
The surge was largely driven by the FAO Sugar Price Index, which rose by 6.6 per cent from January after three consecutive months of decline, reaching 118.5 points in February. The increase was fueled by concerns over likely tighter global supplies for the 2024/25 season, particularly due to declining production prospects in India and adverse weather conditions affecting crops in Brazil.
The FAO Dairy Price Index increased by 4.0 per cent from January, averaging 148.7 points. The rise was the result of higher prices across all major dairy products, including cheese and whole milk powder, as strong import demand exceeded production in key exporting regions.
The FAO Vegetable Oil Price Index averaged 156.0 points in February, up 2.0 per cent from January and as much as 29.1 per cent higher than a year earlier. The increase was largely the result of higher prices for palm, soy, and sunflower oils, driven by seasonal supply constraints in Southeast Asia and robust demand from the biodiesel sector.
The FAO Cereal Price Index edged up 0.7 per cent in February, averaging 112.6 points. Wheat prices increased due to tighter supplies in the Russian Federation and concerns over crop conditions in Eastern Europe and North America, though the overall index remained slightly below its February 2024 level. World maize prices continued to rise, underpinned by tightening supplies in Brazil and strong US export demand. By contrast, world rice prices fell by 6.8 per cent in February due to ample exportable supplies and weak import demand.
The FAO Meat Price Index held steady in February, averaging 118.0 points, down marginally by 0.1 per cent from January. While international poultry and pig meat prices eased due to abundant supplies, ovine and bovine meat prices remained firm, supported by strong global import demand.