FAO Food Price Index up slightly in February

The FAO Food Price Index averaged 170.8 points in February 2018, 1.1 percent (1.8 points) higher than in January but 2.7 percent below its value in the corresponding period last year. Higher international prices of dairy and cereals contributed to the month-on-month increase in the value of the FFPI, whereas the prices of sugar and vegetable oils fell while those for meat remained steady.

The FAO Cereal Price Index averaged 160.8 points in February, up 2.5 percent (4 points) from January and 6.8 percent from February 2017. The increase in February marked the second consecutive month of notably strong month-on-month rise in the value of the Index after a relatively stable period from August to December of last year. Grain prices were generally firmer in February, underpinned by a brisk trade activity and concerns over unfavourable weather adversely affecting the US winter wheat and Argentina’s maize growing regions. International rice prices strengthened as well, although gains were capped by subsiding global demand for Indica supplies.

The FAO Vegetable Oil Price Index averaged 158 points in February, down 3.1 percent (5.1 points) from January, marking a 19-month low. Prices of most vegetable oils weakened amid prospects of a growing global production surplus in 2017/18. Palm oil price quotations dropped the most, underpinned by slower-than-expected export activities and rising inventories in Malaysia and Indonesia. In the meantime, the outlook of record soy crushings in the US weighed on international soybean quotations, while sluggish demand (primarily from the biodiesel sector) pressured rapeseed prices.

The FAO Dairy Price Index averaged 191.1 points in February, up 11.2 points (6.2 percent) from January but still slightly below the corresponding period last year. International price quotations across all four categories of milk products that constitute the index rose, supported by strong import demand amidst lower than expected milk output in New Zealand. Butter price quotations increased by nearly 6 percent after declining for four consecutive months since reaching its recent peak in September 2017. Price quotations for Cheese and Whole Milk Powder (WMP) also rose, underpinned by strong demand in Europe and Asia, while firm global demand pushed up Skim Milk Powder (SMP) values.

The FAO Meat Price Index averaged 169 points in February, unchanged from its slightly revised value for January 2018 and almost 5 percent higher than at the same point last year. An increase in price quotations for bovine meat was offset by decreases in poultry and pig meat quotations, while those of ovine meat remained almost unchanged. Limited export availabilities from New Zealand caused bovine meat prices to strengthen for the second month in a row. International price quotations for poultry meat declined for the fourth consecutive month, largely on account of abundant export availabilities in major producing regions. Limited world import demand pressured the pig meat price index, which continued to fall since September 2017.

The FAO Sugar Price Index averaged 193 points in February, down 3.4 percent (7 points) from January and hitting its lowest level in two years. International sugar prices remained under downward pressure, as production by major producers, such as Thailand and India, continued to expand. Sugar markets also remained depressed on expectation of a sharp rise in the EU production in 2017/18, boosted by higher beet yields and last year’s removal of output quotas, which gave rise to larger plantings