FAO Food Price Index hits 23-month high

In January, the Food and Agriculture Organisation of the United Nations (FAO) Food Price Index* reached its highest level since February 2015. The Index opened 2017 at 173.8 points – up 3.7 points (2%) from the previous month and 24.5 points (16%) above where it was the same time last year.

The strong upturn in the Index in January was driven by a rise in global sugar quotations and considerably higher cereal and vegetable oil export prices. Meat and dairy prices, however, remained fairly stable.

The Meat Price Index averaged 156.7 points in January – relatively unchanged from the December value. A lift in bovine meat quotations was offset by a decline in ovine, poultry and pig meat prices. FAO reported short cattle supplies in Australia, due to the herd rebuild, contributed to the price increase, while ovine prices eased on the back of the seasonal high slaughter in the Oceania region. Pig and poultry meat quotations reportedly reduced for the third consecutive month due to generally abundant world supplies and steady demand.

The large spike in international sugar quotations during the month was associated with an expected shortfall in global sugar production for 2016-17, with tighter supplies forecast in the world’s largest sugar producing countries – Brazil and India. The Sugar Price Index averaged 288.5 points in January, up 26 points (10%) from the month prior.  

The Cereal Price Index hit a six-month high in January – at 147 points – with increases recorded across all major cereal categories. Wheat values lifted on concerns of poor weather affecting 2017 crops and the reported decline in winter wheat area in the US. Maize values firmed on the back of strong demand and uncertain crop prospects in South America. Global rice prices rose in January, with an anticipated return of key buyers to the market and reduced export supplies from India. 

*The FAO Food Price Index is a measure of the monthly change in international prices of a basket of food commodities. It consists of an 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).