The Food Price Index (FFPI) Food and Agriculture Organization of the United Nations (FAO) averaged 113,3 points in January 2021 – 4,3% higher than in December 2020. This makes it the eighth consecutive month with an increase. It is also the highest monthly average since July 2014. The latest increase reflected strong gains in the sugar, cereals, and vegetable oils sub-indices, while meat and dairy values were also up, albeit to a lesser extent.
Global grain prices
The FAO Cereal Price Index averaged 124,2 points in January, marking a sharp increase of 7,1% from December and the seventh consecutive monthly rise. International maize prices increased significantly, surging by 11,2% in January – up by 42,3% above the January 2020 level. This reflects an increasingly tight global maize supply with lower than expected production and stock estimates in the United States (US) and substantial purchases by China.
Among other coarse grains, barley prices also increased in January by 6,9%, supported by firmer demand and price rises for maize, wheat, and soya beans, while sorghum prices remained stable. Wheat prices also registered strong increases in January, up by 6,8%, influenced by the strength in maize prices as well as strong global demand and expectations of reduced sales by the Russian Federation from March 2021, when the wheat export duty will double.
As for rice, robust demand from Asian and African buyers, combined with tight supplies in Thailand and Vietnam, continued to underpin export prices in January.
Vegetable oil prices
The FAO Vegetable Oil Price Index averaged 138,8 points in January, up 5,8% from December – marking the highest level since May 2012. The eighth consecutive monthly increase of the index mainly reflected higher palm, soya bean, and sunflower seed oil prices. Palm oil production in both Indonesia and Malaysia turned out lower than earlier expected due to excessive rainfall. Malaysia also experienced continued shortages in its migrant labour force. International palm oil quotations climbed to an eight-and-a-half-year high.
Meanwhile, international soya bean oil prices rose for the eighth month in succession, fuelled by reduced export availabilities and prolonged strikes in Argentina. As for sunflower seed oil, continued rising prices stemmed from lingering global supply tightness owing to sharply reduced 2020/21 sunflower seed harvests.
The FAO Dairy Price Index averaged 111 points in January, up 1,6% from December 2020. This is also an increase for the eighth consecutive month and places the index 6,9% above its value in the corresponding month last year. In January, butter and whole milk powder (WMP) price quotations increased, underpinned by China’s high purchases in the wake of the country’s upcoming New Year holiday festivities amid seasonally lower exportable supplies in New Zealand. Price quotations for skim milk powder (SMP) also rose, pressured by high import demand for spot supplies and lagging production activities in Western Europe. By contrast, cheese prices fell slightly from the highs registered in December 2020, due to limited internal sales in Europe, coupled with a stock build-up in the US.
The FAO Meat Price Index averaged 96 points in January, up 1% from December 2020, marking the fourth consecutive monthly increase. It is, however, still down 7,3% from the corresponding month last year. International price quotations for all meat types that constitute the index increased in January. Quotations for poultry meat rose the most, especially in Brazil. This was underpinned by brisk global import demand while avian influenza outbreaks constrained poultry exports from several European countries.
Despite high purchases by China in the run-up to the country’s New Year’s celebrations, bovine and pig meat price quotations only increased slightly as global supplies remained adequate to meet demand. Ovine meat prices firmed for a fourth consecutive month, driven by tight supplies from Oceania and strong demand from China.
The FAO Sugar Price Index averaged 94,2 points in January, up 8,1% from December 2020 and reaching the highest level since May 2017. The increase in prices mostly resulted from concerns over lower global availabilities in 2020/21. This followed worsening crop prospects in the European Union, the Russian Federation, Thailand, and South America.
Further support of sugar prices was provided by recent increases in crude oil prices and the strengthening of the Brazilian real against the US dollar. This tends to affect shipments from Brazil, the world’s largest sugar exporter. Continued robust global import demand for sugar also supported prices. The upward pressure on prices was somewhat limited by the large exportable supplies in India, amid expectations of a bumper crop and the approval of export subsidies for the 2020/21 season. – FAO