The UN food agency said its international price index fell in January, slipping 1.9 percent below its level in the last month of 2015, as prices of all the commodities it tracks fell, sugar in particular.
The FAO Food Price Index, a trade-weighted index tracking international market prices for five key commodity groups: major cereals, vegetable oils, dairy, meat and sugar, averaged 150.4 points in January, down 16 percent from a year earlier and registering its lowest level since April 2009.
“The main factors underlying the lingering decline in basic food commodity prices are the generally ample agricultural supply conditions, a slowing global economy, and the strengthening of the US dollar, the agency said in a statement.
FAO also raised its forecast for worldwide cereal stocks in 2016, as a result of lowering its projected consumption and raising 2015 production prospects.
The FAO Sugar Price Index fell 4.1 percent from December, its first drop in four months, as crop conditions improved in Brazil, by far the world’s leading sugar producer and exporter. The Dairy Price Index dropped by 3.0 percent on the back of large supplies, in both the EU and New Zealand, and torpid world import demand, the statement said.
It added that the FAO Cereal Price Index declined 1.7 percent (to 149.1 points) amid ample global supplies and increased competition for export markets, especially for wheat and maize, as well as a strong US dollar.
The Vegetable Oil Price Index dropped 1.7 percent, mainly because of a decline in soy oil prices reflecting expectations of ample global soybean supplies, the statement said, adding that the Meat Price Index moved 1.1 percent lower than its revised December value, with prices of all meat categories falling, except pigmeat, which was sustained by the opening of private storage aid in the EU.
The FAO said that weather patterns associated with El Niño are sending mixed signals about the early prospects for cereal crops in 2016, especially in the Southern Hemisphere, according to FAO’s Cereal Supply and Demand Brief, also released today.
“2016 crop prospects have been “severely weakened” in Southern Africa, and a 25 percent cut in wheat production in South Africa now appears likely. Conditions for the crop are generally favourable in the Russian Federation and the European Union, but winter plantings declined in the United States and Ukraine. The area under wheat is also expected to be cut in India, following a poor monsoon and below average rains since October,” the statement said.
The 2016 outlook for rice along and south of the Equator is “dim” due, at times, to insufficient water and, at others, to excessive rains.
As for the 2015 season, FAO modestly raised its forecast for world cereal production to 2 531 million tonnes, up slightly from that released in December.
Wheat output in Canada and Russia and maize output in China, Canada and Paraguay drove the upward revision. FAO also slightly raised its expectation regarding 2015 world rice production, mostly on account of higher forecasts for China, Viet Nam and the United States.
It said world cereal stocks are set to end the 2016 seasons at 642 million tonnes, higher than they began. That level implies a steady and comfortable global cereal stock-to-use ratio of around 25 percent.