The FAO Food Price Index fell in January for the first time in three months as lower prices of cereals, sugars, oils and meat outstripped gains in dairy values.
The FAO Food Price Index averaged 203.4 points in January 2014, down 1.3 per cent from December and 4.4 per cent below January last year. Except for the FAO dairy price index which rose, the values of other indices that make up the FAO Food Price Index declined last month, in particular sugar and vegetable oils, which dropped by 5.6 per cent and 3.8 per cent respectively.
The FAO Cereal Price Index averaged 188.4 points in January, down 3 points, or 1.6 per cent, from December and as much as 56 points, or 23 per cent, below January 2013. Bumper crops in 2013 helped to boost inventories, which, along with large export supplies, have pushed down international prices of cereals to well below their high levels in 2012 and early months of 2013. With early prospects for 2014 crops also favourable, prices of most cereals declined further in recent weeks.
The FAO Vegetable Oil Price Index averaged 188.6 points in January, down 7.4 points (or 3.8 per cent) from December. The drop mainly reflects developments in the palm oil market, where large supplies and slow export demand led to concerns over growing inventories, thus driving down prices. Furthermore, large export availabilities of sunflower and rape seed and the prospect of record soybean supplies in South America weakened the prices for other vegetable oils, also weighing on the index.
The FAO Dairy Price Index averaged 267.7 points in January, a rise of 3.5 points, or 1.3 per cent, over December. Demand for all dairy products remains firm, especially from China, North Africa, the Middle East (SMP and WMP) and the Russian Federation (butter). Seasonal production is shifting from the southern to the northern hemisphere. Therefore, overall, there are only limited supplies available, which have lent support to prices.
The FAO Meat Price Index averaged 185.2 points in January, down slightly, by 1.7 points, or 1 per cent, from December. Prices for pig meat and sheep meat moved lower, mainly related to good availability, while prices of bovine meat and poultry rose marginally: demand from China and Japan have resulted in beef prices showing consistent growth since the middle of 2013.
The FAO Sugar Price Index averaged 221.6 points in January, down 13.2 points, or 5.6 per cent, from December. Last month’s decline represents the third consecutive monthly fall in sugar prices, driven by large export surpluses on the back of bumper crops in leading sugar producing countries.
