FAO Food Price Index pushes higher

The Food and Agriculture Organisation of the United Nations (FAO) Food Price Index* averaged 172.6 points in October 2016 – up 1.2 points (0.7%) from September and 9.1% above the same time last year. In fact, besides from a brief fall in July, the Index has moved continuously higher since the beginning of the year.

The rise in October was largely attributed to considerable increases in sugar and dairy values during the month, while cereal prices also rose modestly. Dairy quotations were bolstered by reduced stocks and strong domestic demand in the EU, lower output from the Oceania region, combined with increased buyer interest from importing countries. The surge in sugar prices over the last six months has been driven by reduced harvest in the main producing region in Brazil – the world’s largest sugar producer and exporter – due to drier than average seasonal conditions.  The oil and meat indices, on the other hand, declined in October – which kept the overall Food Price Index only marginally higher than the September level.

The FAO Meat Price Index in October was down 1.7 points (1%) from the previous month, to 163.4 points. FAO report that the decline was mostly due to softening EU export prices for pigmeat, due to high domestic supplies, along with weakened import demand from China. Furthermore, bovine meat export prices in the Oceania region continued to move lower during the month, as a result of increased US beef production.

 *The FAO Food Price Index is a measure of the monthly change in international prices of a basket of food commodities. It consists of the average of five commodity group price indices, weighted with the average export shares of each of the groups for 2002-2004 (Food and Agriculture Organisation of the United Nations).