FAO Food Price Index declines further in February

• 2024 wheat output forecast to grow despite price-driven cutbacks in planted area

Rome – The benchmark for world food commodity prices declined for the seventh consecutive month in February, as lower international quotations for all major cereals more than offset rising prices of sugar and meat, the Food and Agriculture Organisation of the United Nations (FAO) reported Friday.

The FAO Food Price Index, which tracks monthly changes in the international prices of a set of globally-traded food commodities, averaged 117.3 points in February, down 0.7% from January and 10.5% from the same month a year ago.

The FAO Cereal Price Index decreased by 5.0% in February to reach a level 22.4% below that of February 2023. Maize export prices dropped the most amid expectations of large harvests in South America and competitive prices offered by Ukraine, while international wheat prices declined mostly due to a strong export pace from the Russian Federation. International rice prices also declined, by 1.6% in February.

The FAO Vegetable Oil Price Index decreased by 1.3% from January to stand 11% below its February 2023 value. International soyoil prices dropped markedly, underpinned by prospects of abundant soybean outputs in South America, while ample global export availabilities of sunflower and rapeseed oils pushed their prices down. World palm oil prices rose marginally in February due to seasonally lower production.

The FAO Sugar Price Index, by contrast, rose 3.2% in February. The increase reflected persistent concerns over Brazil’s upcoming output after a prolonged period of below-average rainfall as well as forecast production declines in Thailand and India, two leading exporting countries.

The FAO Meat Price Index rose by 1.8% from January, with poultry meat quotations rising the most, followed by those for bovine meat, impacted by heavy rains disrupting cattle transportation in Australia. Pig meat prices also rose slightly due to higher demand from China and a tight supply situation in Western Europe. International ovine meat prices declined due in part to record-breaking production following flock rebuilding in Australia.

The FAO Dairy Price Index increased by 1.1%, led by higher import demand from Asian buyers for butter. Prices of milk powders and cheese also rose marginally.

New forecasts for global cereals

FAO also released a new Cereal Supply and Demand Brief, slightly raising its forecast for the world total cereal production in 2023 to 2840 million tons and offering a number of new projections.

Global cereal utilisation in 2023/24 is now forecast at 2 823 million tons, an increase of 1.1% from the previous year due mostly to increased use of maize and wheat for livestock feed. Global cereal stocks are expected to increase, due entirely to coarse grains, with the global cereal stocks-to-use ratio foreseen ending the year at a “comfortable” 31.1% level, up from 30.9%. World trade in cereals is predicted to increase by 1.3% from the previous year, buoyed by an improved outlook for maize exports by Ukraine and stronger demand from China.

FAO also released its preliminary forecast for global wheat production in 2024, pegging it at 797 million tonnes, a 1.0% increase from 2023. Lower wheat prices have elicited a 6% year-on-year decline in winter wheat planting in the United States of America, where outputs may nonetheless rise due to strong yield prospects. Favourable weather conditions are also propping up expectations of increased 2024 wheat production in the Russian Federation, an export powerhouse, as well as above-average outputs in China, India and Pakistan.

Conflicts push acute food insecurity higher

Conflicts and adverse weather are exacerbating hunger in the 45 countries around the world assessed to need external assistance for food, according to the latest Crop Prospects and Food Situation report, a triannual publication by FAO’s Global Information and Early Warning System (GIEWS) also published on Friday.

 “Conflicts in Near East Asia and in West and East Africa are driving alarmingly high levels of the most severe phase of acute food insecurity,” the report said, with very high concerns for the situation of the entire population of the Gaza Strip in Palestine. Widespread dry weather conditions are expected to aggravate food insecurity in Southern Africa.

Although aggregate cereal production is expected to grow modestly in 2024 among the 44 Low-Income Food Deficit Countries, low outputs gathered in 2023 and tightening inventories have pushed up import needs for several sub-Saharan countries.

Harvesting of 2024 cereal crops will begin in April in Southern Africa, where widespread and prolonged rainfall deficits associated with the El Niño weather phenomenon have sharply curtailed production prospects. Key cropping zones in Malawi, Mozambique, Zambia and Zimbabwe received less than 80% of average rainfall since last November, pointing to an increased need for cereal imports by these countries in the forthcoming 2024/2025 marketing year.