World food prices are steady after three months of decline with increased prices for oil and fats balancing out lower cereal and sugar prices, the United Nations Food and Agriculture Organization (FAO) today said.
FAO’s Food Price Index – which measures monthly changes in international prices of a basket of meat, dairy, cereals, oils and fats, and sugar – remained at 210 points in January, same as in December.
The plateau coincides with a revised 2012 forecast for world cereal production estimated at 2,302 million tonnes, up 20 million tonnes from December’s forecast, but two per cent down from the 2011 record crop, the agency said in a news release.
According to the ‘Cereals Supply and Demand Brief’ put out by the agency, the revision is linked to adjustments in maize production estimates in China, North America and the European Commonwealth of Independent States.
Early prospects for 2013 cereal production expect increased world wheat output, largely from a 4 to 5 per cent bump in wheat production within the European Union, where the weather has been favourable so far.
Meanwhile, in the United States, wheat production in the southern Plains is expected to wither due to severe drought conditions.
“Given the tight supply situation, weather remains an important determinant of prices. For several cereals, production needs to increase significantly this year in order to avoid unexpected price surges,” said FAO Senior Grains Economist Abdolreza Abbassian.
The FAO Cereal Price Index dropped 1.1 per cent, or nearly three points, to 247 points in January. The Cereal Index has been on the decline since October, reflecting improved crop conditions.
Prices for oils and fats rose 4.4 per cent, or 9 points, from December, reversing declines in the last four months to an average of 205 in January. The rebound was mainly driven by palm oil on account of fresh import demand.
Dairy prices averaged slightly higher than in December to 198. Meat prices averaged 176, slightly weaker due to lower poultry and pig meat prices.
Sugar prices are falling due to a surplus, notably in Brazil and Thailand. The FAO Sugar Price Index averaged 268 in January, down 2.2 per cent, or 6 points, from December.