FAO Food Price Index slightly lower in October

The FAO Food Price Index (FFPI) averaged 163.5 points in October 2018, down 1.4 points (0.9 percent) from September and some 13 points (7.4 percent) below its level in the corresponding period last year.

The October decline in the FFPI was the result of falling dairy, meat and oils prices, which more than offset a surge in sugar prices and a more moderate increase in the prices of cereals.

The October FFPI is at its lowest level since last May.

The FAO Cereal Price Index averaged 166.3 points in October, marking a rebound of 2.2 points (1.3 percent) from September and representing a 13.6 point (8.9 percent) year-on-year increase.

Among the major cereals, maize quotations from the United States firmed the most, supported by strong export sales, while wheat prices also averaged higher, driven by a tighter supply outlook especially in view of deteriorating crop prospects in Australia. By contrast, rice prices fell, as harvest pressure, competition among exporters and currency movements weighed on Japonica and fragrant quotations.

The FAO Vegetable Oil Price Index averaged 132.9 points in October, down 2 points (1.5 percent) month-on-month. Falling for the ninth month in succession, the index dropped to its lowest level since April 2009.

The latest slide was mostly driven by lower price quotations of palm oil, reflecting persistent pressure from large inventories held by major exporting countries amid sluggish global import demand.

By contrast, international soy oil prices rebounded slightly, underpinned by robust demand from the biodiesel sector, while rapeseed oil values were supported by reduced availabilities in the EU. International sunflower oil prices remained virtually unchanged from September.

The FAO Dairy Price Index averaged 181.8 points in October, down 9.2 points (4.8 percent) from the previous month, continuing the downward trend for the fifth consecutive month.

Price quotations of all the dairy products represented in the index fell in October, plummeting the overall index 15.3 percent below its value in the corresponding month last year and 34 percent below the peak reached in February 2014. The latest price weakness reflects the growing evidence of increased export supplies across all major dairy products, especially from New Zealand.

The FAO Meat Price Index averaged 161.6 points in October, down 3.3 points (2.0 percent) from September and 11 points below its value a year ago. In October, the prices of all main meat categories represented in the index eased, with ovine meat falling the most, followed by pigmeat, bovine and poultry meat. After four months of continuous strength, ovine meat prices lessened, underpinned by the availability of new season supplies from Oceania.

Import restrictions associated with new cases of African swine fever, coupled with large export availabilities from the main producing countries, continued to weigh on pigmeat prices. Bovine meat prices declined for the third consecutive month on continued abundant export supplies, while the current market sluggishness weighed on the prices of poultry meat.

The FAO Sugar Price Index averaged 175.4 points in October, up 14 points (8.7 percent) from September, marking the second consecutive monthly gain.

The rapid increase in sugar price quotations is attributed to negative production prospects in the major sugar producing regions, notably in India and Indonesia, mostly as a result of climate-related events. In Brazil, the world’s largest sugar producer and exporter, the latest indications pointing to an increasing share of sugarcane output being used for ethanol production, have also underpinned international sugar prices.