FAO says September  food prices higher

The benchmark for world food commodity prices saw its fastest increase in 18 months in September, with quotations up for all covered commodity groups, led by sugar, the Food and Agriculture Organization of the United Nations (FAO) reported recently.

The FAO Food Price Index, which tracks monthly changes in the international prices of a set of globally-traded food commodities, averaged 124.4 points in September, up by three percent from August and 2.1 percent higher than its corresponding value a year earlier.

The FAO Sugar Price Index registered the largest increase in September, rising by 10.4 percent from the August level. 

This was driven by worsening crop prospects in Brazil and concerns that India’s decision to lift restrictions on sugarcane use for ethanol production may affect export availabilities from the country.

“Worsening crop prospects in Brazil, due to prolonged dry weather and fires that damaged sugarcane fields in late August, were the main drivers of the increase in global sugar prices. Additionally, concerns that India’s sugar export availability could be affected by the government’s decision to lift restrictions on sugarcane use for ethanol production also contributed to the overall increase in world sugar prices.”

Despite the increase, the sugar price index was still 37 points lower than its value a year ago. 

The cereal price index, meanwhile, inched up by 3 percent in September, led by higher wheat and maize export prices. “International wheat prices increased due largely to concerns over excessively wet conditions in Canada and the European Union, though this was partly offset by competitively priced supplies from the Black Sea region.”

FAO said world maize prices also climbed, influenced by low water levels on key transportation routes along the Madeira River in Brazil and the Mississippi River in the United States of America. 

“By contrast, the FAO All Rice Price Index declined by 0.7 percent, partly reflecting generally quiet trading activities.”

Vegetable oil prices were higher by 4.6 percent in September from August, with higher quotations across the board for palm, soy, sunflower and rapeseed oils. 

“The rise in international palm oil prices was due to lower-than-expected production in major Southeast Asian producing countries, while the rebound in soyoil quotations was primarily due to lower-than-expected crushings in the United States of America.”

The FAO Dairy price Index went up by 3.8 percent in September, with quotations up for whole milk powder, skim milk powder, butter and cheese.

The UN agency said average international meat prices rose slightly due to higher poultry meat prices driven by strong import demand for Brazil’s product. World bovine and pig meat prices remained stable, while those for ovine meat declined slightly from August levels.

FAO also said world wheat production is expected to increase by 0.5 percent in 2024 from the previous year, as improved yield prospects in Australia more than compensate for a significant cut to the European Union’s forecast due to excessively wet conditions.

“By contrast, global production of coarse grains is now expected to decline by 0.8 percent from 2023, with smaller crops in the European Union foreseen to outweigh higher maize output anticipated in the United States of America. World rice production in 2024/25 is now forecast to rise by 0.9 percent and reach a historical high of 539.2 million tons.”