The latest report from the United Nation’s Food and Agriculture Organization (FAO) reveals global food prices dropped to a 55-month low in February with lower prices for cereals, meat and sugar offsetting an increase in milk and palm oil prices.
The FAO Food Price Index averaged 179.4 points in February, down from 181.2 points in January and 208.6 points in February 2014. The price index’ ongoing declineits lowest level since July 2010reflects robust supply conditions as well as ongoing weakness in many currencies versus the U.S. dollar, which appear set to continue.
The Cereal Price Index averaged 171.7 points in February, down 3.2 percent from January, with booming prospects for wheat output explaining the bulk of the decline. Rice prices were more stable, with aromatic rice quotations increasing markedly, compensating for much the declines observed in the other rice varieties.
The Vegetable Oil Index 156.6 points, up 0.4 percent from January, reflected a sizeable rise in palm oil pricesresulting from recent floods in Malaysia and from a hike in Indonesian domestic biofuel subsidies expected to stoke demandeven as soy oil prices continued to decline given prospects of bumper soybean harvests in South America.
The Dairy Price Index rose for the first time in a year, averaging 181.8 points in February, representing a 4.6-percent increase from the previous month. The increase was driven by milk powders and reflects both a seasonal slowdown in European output as the quota for the season draws to a close and a crimped supply from New Zealand and Australia. Cheese quotations remained largely unchanged.
The Meat Price Index averaged 187.4 points in February, down 1.4 percent from its revised January value. Beef and mutton prices declined, largely due to a stronger U.S. dollar against the Brazilian real and the Australian dollar. Pig meat prices rose for the first time in eight months, bolstered by the European Union’s decision to provide aid for private storage in the sector.
The Sugar Price Index averaged 207.1 points in February, down 4.9 percent from January, the sharpest move of any commodity. The drop reflected optimism on production prospects in Brazil after recent rainfalls, as well as India’s announcement it will subsidize exports to boost sugar sales abroad.