Adverse weather pushed food prices up in October, FAO says; outlook mixed

Global prices of major food commodity rose in October due to weather-driven concerns about sugar and palm oil supplies, the Rome-based Food and Agriculture Organisation said.

It said the FAO Food Price Index averaged nearly162 points in October, up 3.9 percent from September, while still down 16 percent from a year earlier. It slightly trimmed its October 2015 forecast for global cereal production and now projects production at 2.53 billion tonnes, 1.1 percent below last year’s record output.

Half of the forecast cut reflected dimmer expectations about maize crops in India and Ukraine, mostly due to adverse weather. Drought in Thailand prompted a reduction in the seasonal rice harvest projection, the FAO said in a statement.

At the same time, the forecast for global wheat production has been raised, largely reflecting a bigger harvest in the European Union than earlier anticipated.

World cereal stocks are expected to remain at a comfortable level, with global wheat inventories rising further, reaching their highest level in 15 years.

Fears of excessive rains in Brazil and reports of drought in India and Thailand that could impact the sugarcane crop saw FAO’s Sugar Price Index surging 17.2 percent from September. The sharp jump reversed the sub-index’s decline since February.

Intensifying concerns that El Niño may hamper next year’s palm oil supply in Indonesia, coupled with slow progress in soybean plantings in Brazil, due also to unfavourable weather, spurred a 6.2 increase in the vegetable oil price index.

The Dairy Price Index rose 9.4 percent from September on concerns that milk output in New Zealand would decline, while the meat price index was stable.

The Cereal Price Index also rose, albeit by a modest 1.7 percent, pushed up in part by growing concerns over dry weather conditions affecting wheat crops in Ukraine and southern parts of the Russian Federation.

The FAO Food Price Index is a trade-weighted index that tracks prices on international markets of five major food commodity groups: cereals, meat, dairy products, vegetable oils and sugar.

Leave a Reply

Your email address will not be published.