Dairy, cereal push global food prices up in February

The FAO Food Price Index averaged 170.8 points in February, up 1.1% from January but just 2.7% below its year-ago level.

The Cereal Price Index averaged 160.8 points in February, up 2.5% from January and 6.8% from February 2017. The increase in February marked the second consecutive month of notably strong month-on-month rise in the value of the Index after a relatively stable period from August to December of last year. Grain prices were generally firmer in February, underpinned by a brisk trade activity and concerns over unfavorable weather adversely affecting the U.S. winter wheat and Argentina’s maize growing regions. FAO also lowered its projections for worldwide wheat harvests this year, while noting that inventory levels are poised to hit a record high.

The Vegetable Oil Price Index averaged 158 points in February, down 3.1%  from January, to reach its lowest level in 19 months amid prospects of a growing global production surplus in the current year. Palm oil prices dropped the most, reflecting rising inventories in Malaysia and Indonesia, while expectations of record soy crushings in the U.S. weighed on soybean quotations.

The Dairy Price Index averaged 191.1 points in February, up 6.2% from January but still slightly below the corresponding period last year. International price quotations rose for butter, cheese and whole and skim milk powders (SMP). Butter price quotations surged nearly 6% after declining for four consecutive months.

The Sugar Price Index averaged 193 points in February, down 3.4% from January and hitting its lowest level in two years. International sugar prices remained under downward pressure, as production by major producers such as Thailand and Indi, continued to expand production and market participants brace for a sharp rise in output in the European Union due to higher beet yields coupled with larger plantings after the removal of output quotas last year.

The Meat Price Index averaged 169 points in February, unchanged from its slightly revised value for January 2018 and almost 5% higher than at the same point last year. An increase in price quotations for bovine meat was offset by decreases in poultry and pig meat quotations, while those of ovine meat remained almost unchanged.