The Food Price Index of the Food and Agriculture Organization of the United Nations (FAO) reached an average of 133.2 points in October, an increase of 3.9 points (3.0%) compared to September and 31.8 points (31, 3%) compared to the same month in 2020. The monthly result, according to FAO, is the highest level since July 2011 and was driven, in large part, by the higher prices of most cereals and vegetable oils. The Meat and Sugar Price Index fell, while the dairy price sub-index remained firm.
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The Cereals price sub-index recorded an average of 137.1 points in October, an increase of 4.3 points (3.2%) compared to September and 25.1 points (22.4%) above the one verified in October 2020. According to the organization, among the main cereals, international wheat prices rose for the fifth consecutive month, up 5% in the month and 38.3% over the same period in 2020 – the highest level since November 2012. “Smaller harvests in major exporters, especially Canada, the Russian Federation and the United States, continue to support prices. The reduction in the global supply of better quality wheat, in particular, has exacerbated the pressure, with premium qualities leading the price increase”, highlighted the FAO.
Barley prices rose in the month, driven by strong demand, reduced production prospects and higher prices in other markets. Rice prices also rose further in the month. On the other hand, corn prices remained stable, supported by gains in energy markets.
The FAO monthly survey also pointed out that the Vegetable Oils price sub-index averaged 184.8 points in October, up 16.3 points (9.6%) compared to September, marking a historic record. “The continued strength of the Index mainly reflects firmer values for palm and rapeseed oils, soy and sunflower oils, which were supported by the resumption of global import demand, particularly from India, which further reduced import tariffs from edible oils”, pointed out the FAO.
International palm oil quotes rose for the fourth month in a row, supported by robust global import demand that coincided with concerns about lower-than-expected production in Malaysia due to persistent labor shortages. “International rapeseed oil prices also rose significantly, influenced by the prolonged tightening of global supply and also by rising oil prices,” the FAO reported.
In the FAO monthly survey, the Meat price sub-index averaged 112.1 points in October, down 0.8 points (0.7%) compared to September, marking the third monthly drop, although 20.3 points (22.1%) above that verified in October of last year. According to FAO, pork prices fell, mainly because of the reduction in purchases from China. “Beef reflected a sharp drop in supply prices from Brazil amid market uncertainty, following suspensions of imports by its main trading partners, due to concerns about mad cow disease.”
Sheep meat international prices rose even more in the month, reflecting Oceania’s continued supply constraints, caused by the high demand to rebuild the herd. Chicken meat prices rose on the back of strong global demand, while production expansions remained weak due to high feed costs and bird flu outbreaks, especially in Europe, explains the FAO.
The Dairy price sub-index, in turn, averaged 120.7 points in October, up 2.6 points (2.2%) compared to September. The average is also 16.2 points higher than that observed in the same month last year (15.5%). In October, international prices for all dairy products rose, according to FAO. “Low milk supply, tight stocks in Europe and a slower-than-anticipated start to the new milk production season in Oceania have also supported world milk prices,” says the organization. Meanwhile, cheese prices remained stable as supplies from major producers were sufficient to meet global import demand.
The FAO also calculated that the Sugar price sub-index averaged 119.1 points in October, down 2.1 points (1.8%) compared to September, marking the first decline after six increases consecutive monthly However, the value is still 40% above that observed in the same period in 2020, mainly due to concerns about the prospects of reduced production in Brazil. “The drop was triggered by limited global import demand and good prospects for production in major exporters such as India and Thailand,” says the FAO. In addition, the devaluation of the real against the US dollar also contributed to the drop in world sugar prices in October. According to the organization, however, the downward pressure on prices was limited by higher ethanol prices in Brazil.
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