The Strategist

FAO: Global food prices rising for the fifth consecutive month in October

11/06/2020 - 03:03

The overall food price index for the month under review increased by 3 points, or 3.1 per cent by September, to 100.9 points, so global food prices in October showed an increase for the fifth consecutive month, according to a press release from the Food and Agriculture Organization of the United Nations (FAO).

The FAO Vegetable Oil Price Index rose 1.8 points, or 1.8 percent, to 106.4 points compared to September, the highest level in nine months. "Retaining high values of this index mainly reflects higher palm and soybean oil prices," the organisation comments. Global palm oil quotations have been rising for the fifth consecutive month due to negative production forecasts in leading producing countries and strong global demand, she explains.

The FAO Cereal Price Index reached 111.6 points, up 7.5 points or 7.2 percent by September. Export wheat prices have risen, reflecting strong global demand amid shrinking supplies, adverse conditions in Argentina and continuing rainfall deficits that adversely affect winter wheat in parts of Europe, North America and the Black Sea region. By contrast, world rice prices have reached their lowest level in the last seven months as the main crop in Asia begins to harvest.

The Dairy Price Index averaged 104.4 points in October, an increase of 2.2 points (2.2%) compared to September. The Index is now in its fifth consecutive month of growth, with a 3.6 points (3.5%) higher value than the corresponding period last year. The organisation notes that cheese prices have risen the most, and slightly less for whole and skimmed milk powder and butter.

The sugar price index rose 6 points (7.6%) to 85 points by September. "This increase was mainly a reflection of expectations of lower sugar production in both Brazil and India - the two largest sugar-producing countries - due to lower-than-average rainfall," comments FAO. The Organization also notes that sugar prices have been highly volatile due to uncertainty in the oil markets and fluctuations in the Brazilian real against the dollar.

Only the FAO Meat Price Index declined during the period under review, by a slight 0.5 points (0.5%) compared to the previous month, to 90.7 points. This decline has been continuing since January and the index is 10.9 points (10.7%) lower than last year. Pork prices have also fallen due to a ban on imports from Germany in China and beef prices due to low demand in the US coupled with increased supplies from South America. Quotations of poultry meat fell due to reduced purchasing from China and Saudi Arabia.