The gauge for world food prices went up in January, largely catalysed by supply-side constraints for vegetable oils, the Food and Agriculture Organization of the United Nations (FAO) reported today.
The FAO Food Price Index averaged 135.7 points in January, 1.1 percent higher than in December. The Index tracks monthly changes in the international prices of commonly-traded food commodities.
The FAO Vegetable Oils Price Index led the rebound in January, increasing by 4.2 percent month-on-month and reversing its December decline to reach an all-time high. Quotations for all major oils rose, also supported by rising crude oil prices. Palm oil prices were largely underpinned by concerns over a possible reduction in export availabilities from Indonesia, the world’s leading exporter, while soy oil prices were supported by robust import purchases, particularly from India, rapeseed oil prices were pushed up by lingering supply tightness, and sunflowerseed oil quotations were impacted by supply tightness and surging global import demand.
Referring to the latest vegetable oils price increase, Boubaker Ben-Belhassen, Director of FAO’s Markets and Trade Division said: “Reduced export availabilities on top of other supply-side constraints, especially labour shortages and unfavourable weather, largely pushed vegetable oil prices up to an all-time high. There is a concern the impacts of these constraints will not ease quickly.”
The FAO Dairy Price Index increased by 2.4 percent, its fifth consecutive monthly rise, with the steepest increases registered for skim milk powder and butter. Reduced export availabilities from Western Europe and below-average expectations for milk production in Oceania in the months ahead contributed to the tightening in global dairy markets, as did processing and transportation delays linked to COVID-19-related labour shortages.
The FAO Cereal Price Index in January increased marginally, by 0.1 percent, from December. Maize export prices rose by 3.8 percent during the month, spurred by worries about persistent drought conditions in South America, while world wheat prices declined by 3.1 percent on the back of large harvests in Australia and Argentina. Lower harvests and steady purchases by Asian buyers led to a 3.1 percent monthly increase in international rice prices.
The FAO Meat Price Index increased slightly in January, with world bovine meat prices reaching a new peak as global import demand exceeded export supplies, while ovine and poultry meat prices softened as exportable supplies outstripped import demand. Pig meat quotations rose slightly, in part due to rising input costs dampening global supply.
The FAO Sugar Price Index was the only subindex to post a decrease in January, down 3.1 percent from the previous month due to favourable production prospects in major exporters India and Thailand, as well as improved rains and lower ethanol prices in Brazil.
The FAO Food Price Index* (FFPI) averaged 135.7 points in January 2022, 1.5 points (1.1 percent) higher than in December 2021. The FFPI's rebound in January was led by solid gains in vegetable oils and dairy sub-indices, partially offset by a decline in sugar prices for the second consecutive month. Meat and cereal sub-indices remained largely unchanged.
» The FAO Cereal Price Index averaged 140.6 points in January, up marginally (0.1 percent) from December and 15.6 points (12.5 percent) above its level one year ago. World wheat prices eased in January, down 3.1 percent, with increased seasonal supplies from large harvests in Australia and Argentina. However, support from continued strong demand amidst tight global availability of higher-quality wheat along with uncertainty over exportable supplies, prevented prices from declining further. By contrast, maize export prices were firmer in January, gaining 3.8 percent since December, mostly on concerns of persistent drought conditions in the southern hemisphere, namely Argentina and Brazil; spillover effects from the wheat market added upward pressure on maize prices. Among other coarse grains, international sorghum prices also rose in January, in line with maize price trends, while barley quotations were slightly lower. The completion of main-crop harvests in major suppliers and purchases by Asian buyers also raised international rice prices in January by 3.1 percent.
» The FAO Vegetable Oil Price Index averaged 185.9 points in January, up 7.4 points (4.2 percent) month-on-month, marking an all-time high. The rise reflected higher quotations for palm, soy, rapeseed and sunflowerseed oil. After a short-lived drop, international palm oil prices rebounded in January, largely underpinned by concerns over a possible reduction in export availabilities from Indonesia, the world's top palm oil exporter, as well as subdued output in key producing countries. World soyoil prices also recovered, supported by robust import purchases, particularly from India. In the meantime, rapeseed and sunflowerseed oil prices were buoyed by, respectively, lingering supply tightness and surging global import demand. Rising crude oil prices also lent support to international vegetable oil values.
» The FAO Dairy Price Index averaged 132.1 points in January, up 3.1 points (2.4 percent) from December 2021, marking the fifth consecutive monthly increase, and placing the index 20.8 points (18.7 percent) above its value in the corresponding month last year. In January, price quotations for dairy products rose, with the steepest increases in skim milk powder and butter. The January increase was underpinned by a tightening in global markets, reflecting a reduction in export availabilities, especially from Western Europe, where a reported reduction in milk deliveries in some large milk-producing countries and lower stock levels supported prices. Expectations for milk production in Oceania to remain below its average levels in the months ahead added to the tightening in global dairy markets. In addition, milk processing and transportation delays due to COVID-19-related labour shortages further contributed to higher dairy prices.
» The FAO Meat Price Index* averaged 112.6 points in January, up slightly from December 2021, and lifting the index value 16.6 points (17.3 percent) above its corresponding month a year ago. In January, bovine prices reached a new peak, underpinned by strong global import demand exceeding export supplies, mainly from Brazil and Oceania, reflecting lower cattle supplies for processing. Meanwhile, pig meat quotations rose slightly, as labour shortages and high input costs dampened global supply, countering the downward pressure from China's slowdown in imports. By contrast, ovine and poultry meat prices softened further, as global exportable supplies outstripped import demand, despite constrained supplies stemming from COVID-19-related production and transportation delays, and avian flu outbreaks in some large poultry meat producing countries.
» The FAO Sugar Price Index averaged 112.8 points in January, down 3.7 points (3.1 percent) from December, marking the second consecutive monthly decline and the lowest level in the past six months. The January decline in international sugar price quotations was mostly related to favourable production prospects and good harvest progress in major exporters, India and Thailand, and improved rains in key growing areas of Brazil. In addition, lower ethanol prices in Brazil exerted further downward pressure on world sugar prices in January. However, the strengthening of the Brazilian Real against the US Dollar, which tends to restrain shipments from Brazil, the world's largest sugar exporter, prevented more substantial sugar price declines.
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