Global food commodity prices continued their upward trend in September, averaging 170.9 points in September 2016, up almost 5 points (2.9 percent) from August and 10 percent above the corresponding month last year, according to the UN’s Food Agriculture Organization (FAO) Food Price Index. The September value is the highest since March 2015 and was driven mostly by stronger dairy and sugar quotations. Food commodity prices have been rising since January 2016, mainly the result in sugar prices and more moderate increases for dairy products, meat and oils.
The Cereal Price Index averaged 140.9 points in September, down 2.7 points (1.9 percent) from August and 8.9 percent below its year-earlier level. The decline in September marked the third consecutive month of decreases, largely due to ample global supplies, especially export availabilities. This year’s record wheat production, coupled with an expected rebound in global rice production and above-average performance of coarse grains, maize in particular, have continued to weigh on cereal export quotations.
The Vegetable Oil Price Index averaged almost 172 points in September, up 2.9 points (or 1.7 percent) from August, reflecting higher quotations of palm, soy and rapeseed oils. Palm oil values continued to strengthen, underpinned by weaker than anticipated output growth and low stock levels in both exporting and importing countries. International soy oil quotations appreciated on tight global export availabilities, while rapeseed oil prices firmed on concerns about global output falling for a third consecutive year in 2016/17.
The Dairy Price Index averaged 176 points in September, up as much as 21 points (13.8 percent) from August. Quotations rose for all dairy products, in particular butter, which was bolstered by reduced stocks and strong internal demand in the European Union. The Index has risen 38 percent since April. The current price surge stems from expectations that falling milk production in the EU and a muted opening to the dairy year in Oceania would result in tighter availabilities for export, following excess supplies in the preceding two years.
The Sugar Price Index averaged 304.8 points in September, up 19 points (6.7 percent) from August, the fifth consecutive monthly increase. The latest surge in international sugar prices was largely on the back of unfavorable weather conditions in Brazil, the world’s largest sugar producer and exporter. Reports of lower production in India, the world’s second largest sugar producer, and tight supplies in Thailand and China, also added to the upward pressure on prices.
The Meat Price Index averaged 163.5 points in September, essentially unchanged from August. Since January, when it hit a five-year low, the Index has risen by 12.6 percent. The largest increase for the year so far has been recorded for pig meat, followed by ovine and poultry meat, while bovine meat experienced only a limited rise. Firm international demand, in particular from Asia, underpinned pig meat and poultry meat prices, while reduced international supplies reinforced those of ovine meat. Meanwhile, a recovery in bovine meat production in the United States has reduced the need for imports, contributing to a restrained international price rise for this commodity.