Global food commodity prices fell in January, led by sharp declines in sugar and vegetable oils, the UN's Food and Agriculture Organization (FAO) said on Friday.
The FAO Food Price Index, which tracks monthly changes in a basket of internationally traded food commodities, averaged 124.9 points in January versus 127.0 in December. Despite the monthly decline, the index remained 6.2% higher than a year earlier, but was still 22% below its March 2022 peak.
Falling food and commodity prices
Sugar prices fell 6.8% from the previous month and 18.5% on the year. The decline was largely attributed to improved global supply prospects, thanks in part to favorable weather in Brazil and India, which have resumed sugar exports.
Vegetable oil prices fell 5.6% last month, with global palm and rapeseed oil prices falling while soybean and sunflower oil quotations remained steady. Despite January's drop, the index was still up 24.9% on the year. Meat prices also fell, falling 1.7% in January.
In contrast, cereal prices saw a slight increase, rising 0.3% from December. However, they still remained 6.9% lower than in January 2024. Wheat export prices recorded a slight decline. On the other hand, corn prices rose, boosted by revised production forecasts and lower inventories in the United States. Rice prices fell 4.7%, reflecting ample export supplies.
Adjustments to global production forecasts
Dairy prices rose 2.4% month-on-month and 20.4% year-on-year, led by a monthly rise in cheese quotations, which outpaced declines in butter and milk powder prices.
In a separate report, FAO cut its forecast for global cereal production in 2024 to 2.840 billion from 2.841 billion previously. The revision was mainly due to a cut in estimates for U.S. maize production.
The winter wheat planting season in the Northern Hemisphere ended in January. There was an increase in sowings in France, Germany and the United Kingdom. On the other hand, in Russia, plantings registered a decline due to weather conditions, according to the FAO.
Corn harvests in the southern hemisphere will begin in the second quarter, with improved yields expected in Argentina and Brazil. High corn prices have driven increased planting in South Africa.
Revisions to production and trade forecasts
FAO has raised its forecast for world cereal utilization in 2024/25 by 0.9% to 2.869 billion tonnes. Meanwhile, global cereal stocks are expected to fall by 2.2% by the end of the seasons in 2025. This reduction will be mainly impacted by the contraction in US maize stocks.
International cereal trade in 2024/25 is expected to fall by 5.6% compared to the previous year to 483.5 million tonnes, largely due to lower demand from China for barley, corn and wheat.
Source: Crispian Balmer | Notícias Agrícolas
