FAO Food Price Index drops amid coronavirus concerns

The FAO Food Price Index averaged 180.5 points in February, down 1% from January, but still 8.1% higher than February 2019. It was driven by a sharp fall in the export prices of vegetable oils and, to a lesser extent, meat and grains, more than offsetting a continued rise in dairy and sugar prices.

The Cereal Price Index averaged 167.8 points in February, down 1.5 points (0.9%) from January. International prices of all major cereals, except rice, fell in February. Wheat prices were lower, reflecting well-supplied markets, while maize prices retreated as demand from the livestock feed sector dipped amid expectations of a weakening global economy. By contrast, international rice prices rose, buoyed by strong demand from Far Eastern and East African buyers.

The Vegetable Oil Price Index averaged 158.1 points in February, down 18.2 points (or 10.3%) from January with international palm oil prices falling by even more on account of higher-than-expected output in Malaysia, a temporary drop in India’s import demand and concerns over the spread of COVID-19. Soy, sunflower and rapeseed oil prices followed palm oil downwards amid COVID-19 related concerns and, in the case of soy oil, reports of larger than anticipated inventories in the United States.

The FAO Dairy Price Index averaged 209.8 points in February, up 9.2 points (4.6%) from January, rising for the fourth consecutive month and placing the index at 17.4 points (9%) above its value in the corresponding month last year. In February, price quotations for cheese surged by as much as 10.6%, partly linked to reduced milk output in Australia. Milk powders, by contrast, dipped as logistical bottlenecks slowed purchases by China, the world's largest milk powder importer.

The Sugar Price Index averaged 209.7 points in February, up 9.0 points (4.5%) from January, marking the fifth consecutive monthly increase and the highest level since May 2017. The latest increase mostly reflects prospects of lower production in India as well as in Thailand, combined with a strong global import demand.

The Meat Price Index averaged 178.6 points in February, down 3.7 points (2%) from January, marking the second month of decline, following 11 months of moderate increases. At this level, the index value was 15.9 points (9.8%) above the corresponding month last year. The drop was influenced by reduced imports by China impacted by delays in cargo handling in ports. Drought-induced slaughter in New Zealand exerted further pressure on ovine meat price quotations, while poultry meat prices were affected by lower imports by Asia.