Global food prices decline for 10th consecutive month

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The Food and Agriculture Organisation (FAO) Food Price Index has revealed that international food commodity prices declined in January for the tenth consecutive month.

the report released at the weekend said the FAO Food Price Index averaged 131.2 points in January, 0.8% lower than the previous month and 17.9% below its peak reached in March 2022.

The index tracks monthly changes in the international prices of commonly-traded food commodities. The price indices for vegetable oils, dairy, and sugar drove the January decline, while those for cereals, and meat remained largely stable.

In January, the FAO Cereal Price Index was essentially unchanged (up a mere 0.1 percent) from December and stood 4.8% above its level of one year earlier. International wheat prices declined by 2.5% as production in Australia and the Russian Federation outpaced expectations.

The report states that world maize prices rose marginally due to strong demand for exports from Brazil and concerns over dry conditions in Argentina. International rice prices, however, jumped by 6.2% from December, influenced by tighter availabilities, strong local demand in some Asian exporting countries, and exchange rate movements.

The FAO Vegetable Oil Price Index declined by 2.9% in January. World prices of palm and soy oils dropped amid subdued global import demand, while those of sunflower seed and rapeseed oils declined due to ample export availabilities.

The FAO Dairy Price Index averaged 1.4% lower than in December, with prices trending down for butter and milk powders on lighter demand from leading importers and increased supplies from New Zealand. World cheese prices rose slightly, driven by a recovery in food services and retail sales in Western Europe following the New Year holiday, as well as currency movements.

The FAO Meat Price Index moved fractionally in January (edging down just 0.1 percent from December), as ample export availabilities weighed on poultry, pig and bovine meat prices, while ovine export prices rose due to stronger import demand.

The FAO Sugar Price Index dropped by 1.1% from December. Strong harvest progress in Thailand and favorable weather conditions in Brazil outweighed the impact on prices due to concerns over lower crop yields in India, higher gasoline prices in Brazil, which support demand for ethanol, as well as the Brazilian real’s appreciation against the United States dollar.

In its new Cereal Supply and Demand Brief, also released Friday, FAO raised its forecast for world cereal production in 2022; however, global cereal supplies are still forecast to tighten in 2022/23.

Global cereal output in 2022 is now forecast at 2 765 million tons or 1.7% below the 2021 outturn. Upward revisions for Australia and the Russian Federation now point to a record global output for wheat in 2022, while total coarse grains production is expected to decline by 3.3% from the previous year.

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