Food: Global Prices up to February 2019

In the second month of the year, the FAO food price index fell 2% from February 2018, explained by the decline in the prices of meat, vegetable oils and sugar.

Thursday, March 7, 2019

From FAO's monthly report:

The FAO Food Price Index* (FFPI) averaged 167.5 points in February 2019, up 2.7 points (1.7 percent) from January.  While the February value of the FFPI marked its highest level since August 2018, it remained nearly 4 points (2.3 percent) below its level in the corresponding month last year. Prices of all commodities represented in the FFPI rose in February, with sharp increases registered for dairy prices.

The FAO Cereal Price Index averaged almost 169 points in February, up marginally from January and nearly 8 points (4.7 percent) above its February 2018 level. Among the major cereals, maize prices rose the most, driven up by higher export quotations from the United States mostly because of worries over shipping disruptions. However, wheat prices, which started the month on a firmer note due mostly to supply concerns, fell under significant downward pressure on weaker pace in purchases. FAO's rice price index held steady, as slow demand depressed Indica quotations, offsetting continued gains registered in the Japonica market driven by brisker trade.

The FAO Vegetable Oil Price Index averaged 133.5 points in February, up 2.3 points (or 1.8 percent) from the previous month and marking its highest level since October 2018. The rise of the index mainly reflects higher values of palm, soy and sunflower oils. Palm oil prices rose for the third consecutive month as pronounced seasonal output contractions in leading producing countries coincided with robust domestic demand.  Soy and sunflower oil prices firmed in response to limited global supplies. Strong mineral oil prices also contributed to the increase in vegetable oils values.

The FAO Meat Price Index* averaged 163.6 points in February, up slightly (1.2 points or 0.7 percent) from January but still 4 percent below the corresponding month last year. In February, price quotations for bovine and pigmeat increased, underpinned by robust import demand, along with limited export supplies of bovine meat, especially from New Zealand, and of pigmeat from the EU. However, poultry prices fell due largely to slower pace in foreign sales, while ovine meat prices also declined, reflecting abundant export supplies from New Zealand.

The FAO Dairy Price Index averaged 192.4 points in February, up 10.3 points (5.6 percent) from January and now close to last year’s February value. International price quotations for all dairy products (represented in the Index) rose in February, with the highest month-on-month rise in percentage terms registered for Skim Milk Powder (SMP), followed by Whole Milk Powder (WMP), cheese and butter. Strong import demand, especially for supplies from Oceania, drove up SMP, WMP and cheese prices. As for butter, a seasonal drop in production anticipated in Oceania over the coming months was supportive to prices.

The FAO Sugar Price Index averaged just over 184 points in February 2019, up 2.2 points (1.2 percent) from January 2019. The increase largely reflected concerns over production prospects in some of the main producing countries. India sugar production in 2018/19 is now expected to contract by 5 percent from last year’s level, while in Brazil’s centre-south region, the country’s heart of the sugar sector, output during October 2018-January 2019 is estimated to have declined by 26 percent from the same period in the previous season. An increase in gasoline prices in Brazil lent further support to international sugar price quotations, by making Brazil’s sugar mills use more sugarcane for domestic ethanol production instead of sugar.

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