FAO Food Price Index’s largest rise in 3 years
18 November 2015
The United Nations Food and Agricultural Organisation (FAO) Food Price Index* averaged almost 162 points in October 2015 – 6 points (4%) higher than the previous month, which is the greatest month-on-month increase since July 2012. The Food Price Index is still, however, 31 points (16%) lower than year-ago levels.
The rise in October was mostly attributed to higher quotations for sugar, vegetable oils and dairy quotations, while cereal prices lifted to a lesser extent.
The FAO report that the increase in the Dairy Price Index was largely driven by concerns of declining milk production in New Zealand, which subsequently saw export prices from the EU lift as well. The Sugar Price Index was higher mainly as a result of heavy rain in Brazil (the world’s largest sugar producer) hindering sugarcane harvesting.
The Cereal Price Index rose to a lesser degree, primarily led by an increase in wheat and maize prices. According to the FAO, dry winter conditions have affected wheat production in some countries, along with declining production in Australia. Maize prices have reportedly strengthened on the back on of a slowdown in producer sales in the US – the world’s largest producer and exporter of maize.
The Meat Price Index has been fairly stable over the past eight months, and averaged 168.8 points in October – relatively unchanged from September levels. Only ovine quotations registered an increase for the month, reportedly due to tighter export supplies in the Oceania region, while all other categories were steady.
*The FAO Food Price Index is a measure of the monthly change in international prices of a basket of food commodities. It consists of the average of five commodity group price indices, weighted with the average export shares of each of the groups for 2002-2004 (Food and Agriculture Organisation of the United Nations).
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