FAO Food Price Index posts sharpest gain since mid-2012
March 6, 2014
by Eric Schroeder
ROME — The Food and Agriculture Organization of the United Nations said the FAO Food Price Index was 208.1 in February, up 5.2 points, or 2.6 percent, from January, marking its sharpest increase since mid-2012. Despite the gain, the index was still 2.1 percent lower than in February 2013.
“Last month’s rebound, the sharpest witnessed since mid-2012, resulted from strengthening quotations of all the commodity groups making up the index, except meat, which fell marginally,” the FAO said. “The products that have incurred the strongest rises since last month were sugar (up 6.2 percent) and oils (up 4.9 percent), followed by cereals (up 3.6 percent) and dairy (up 2.9 percent).”
The Meat Price Index averaged 182.6 points, down 0.5 points from 183.2 points in January, as the reduced cost of feed has contributed to some decline in prices for poultry and pig meat. On the other hand, the FAO said bovine meat prices are at almost the same level, while limited export supplies have lent support to sheep meat prices.
The FAO Cereal Price Index was at 195.8 points in February, up 3.6 percent, or 6.8 points, from 189 points in January.
“Last month’s price bounce mainly mirrors concerns over wheat crops in the United States, a brisk demand for coarse grains for both feed and biofuel and strong Japonica rice prices,” the FAO said. “Yet, cereal prices remain, overall, 18.8 percent below their level in February last year, a clear sign that the world supply/demand situation has eased considerably compared to last year.”
The Dairy Price Index averaged 275.4 points, up 7.7 points from January. The FAO said demand for dairy products remains firm, especially from North Africa, the Middle East and the Russian Federation.
The Sugar Price Index averaged 235.4 points in February, up from 221.7 points in January.
“Following a three-month decline, sugar prices recovered in late February, prompted by concerns of crop damage from dry weather in Brazil and recent forecasts pointing to a potential drop of output in India,” the FAO said.
The Vegetable Oil Price Index was 197.8 points in February, up 9.2 points from January, driven primarily by firmer prices for palm oil and soy oil.
“The palm oil market strength mainly reflects concerns over dry weather in some major production areas in Southeast Asia, together with buoyant demand worldwide, including from biodiesel producers,” the FAO said. “As for soy oil, quotations rose on fears that unfavorable weather in South America could negatively impact soybean crops.”
The Food Price Index consists of the average of five commodity group price indices weighted with the average export shares of each of the groups for 2002-04. In total, 73 commodity quotations considered by FAO commodity specialists as representing the international prices of the food commodities are included in the overall index.