Global food commodity prices hit 6-year high

The FAO Food Price Index, which tracks monthly changes in the international prices of commonly traded food commodities, averaged 113.3 points in January, 4.3% higher than in December 2020 and reaching its highest level since July 2014.

The Cereal Price Index averaged 124.2 points in January, marking a sharp increase of 8.3 points (7.1%) from December and the seventh consecutive monthly rise. International maize prices surged 11.2% in January, up 42.3% above their January 2020 level, reflecting increasingly tight global supply with lower-than-earlier-expected production and stock estimates in the U.S. and substantial purchases by China. Wheat prices rose 6.8%, driven by strong global demand and expectations of reduced sales by the Russian Federation when its wheat export duty doubles in March 2021. Robust demand from Asian and African buyers underpinned strong rice prices.

The Vegetable Oil Price Index averaged 138.8 points in January, up 7.7 points (or 5.8%) from December and marking the highest level since May 2012. The index’ eighth consecutive monthly increase mainly reflected higher palm, soy and sunflower seed oil prices. Factor included lower-than-expected palm oil production in Indonesia and Malaysia due to excessive rainfall and ongoing shortages in the migrant labor force, and prolonged strikes in Argentina reducing export availability for soy oil.

The Dairy Price Index averaged 111.0 points in January, up 1.7 points (1.6%) from December 2020, rising for the eighth consecutive month and placing the index at 7.1 points (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) too 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 U.S.

The Sugar Price Index averaged 94.2 points in January, up 7 points (8.1%) from December 2020 and reaching the highest level since May 2017. Robust global import demand spurred concerns about lower availabilities due to worsening crop prospects in the European Union, the Russian Federation and Thailand, as well as drier-than-normal weather conditions in South America. Rising crude oil prices and a stronger Brazilian Real also provided support to international sugar prices.

The Meat Price Index averaged 96 points in January, up 0.9 points (1%) from December 2020, marking the fourth consecutive monthly increase, but still down 7.6 points (7.3%) from the corresponding month last year. Increases were led by brisk global imports of poultry meat, especially from Brazil, amid avian influenza outbreaks that have constrained output and exports from several European countries.