driven by significant drops in sugar and vegetable oils, according to the Food and Agriculture Organization (FAO).
The FAO Food Price Index, which tracks the price movements of major internationally traded food commodities, averaged 124.9 points in January, a decrease from 127 points in December. While prices fell month-on-month, the index remains 6.2% higher compared to the same period last year and is still 22% below the peak reached in March 2022.
Sugar prices experienced a sharp decline of 6.8% from December and an 18.5% drop from the previous year, largely due to improved global supply conditions. This improvement is attributed to favorable weather in key sugar-producing countries like Brazil and India’s decision to resume exports.
Vegetable oil prices also fell by 5.6% in January. A decline in global prices for palm and rapeseed oil contributed to this drop, while prices for soy and sunflower oil remained stable. Despite this dip, the vegetable oil index remains 24.9% higher than a year ago.
Meat prices decreased by 1.7% in January, contributing to the overall reduction in food commodity costs.
In contrast, cereal prices saw a slight increase of 0.3% compared to December, although they remain 6.9% lower than the previous year. Wheat export prices saw a modest decline, while maize prices rose due to lower-than-expected production and stock forecasts in the United States.
Rice prices fell by 4.7%, largely due to an abundant supply.
Meanwhile, dairy prices increased by 2.4% from December and surged 20.4% compared to January 2024. This rise was primarily driven by a significant jump in cheese prices, which offset declines in butter and milk powder prices.
The FAO also released a revised forecast for global cereal production in 2024, lowering its expectations due to reduced maize output projections in the United States.
The FAO noted that the winter wheat planting season in the northern hemisphere concluded in January. Countries like France, Germany, and the United Kingdom saw increased sowing, while Russia experienced a decline due to adverse weather conditions.
Looking to the southern hemisphere, the maize harvest season will begin in the second quarter of 2024, with improved yields expected in Argentina and Brazil. Increased maize prices have also led to more planting in South Africa.
The FAO revised its forecast for global cereal utilization in 2024/25, raising it by 0.9% to 2.869 billion tonnes. However, global cereal stocks are expected to decrease by 2.2% by the end of the 2025 seasons, primarily due to a reduction in U.S. maize stocks.
International trade in cereals for the 2024/25 period is expected to decline by 5.6% compared to the previous year, totaling 483.5 million tonnes. This decrease is largely driven by reduced demand from China for barley, maize, and wheat.
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