Global food price rises in January — FAO

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Global food prices began the year on a buoyant note, as the FAO Food
Price Index averaged 164.8 points in January 2019, up 1.8 percent from
December 2018.

In its Food Price Index report for January 2019, released on Thursday,
the UN Agency noted that a sharp rebound in dairy price quotations and
firmer prices of palm and soy oils drove the increase.

The Food Price Index, an indicator of the monthly changes in
international prices of a basket of food commodities, was still 2.2
percent below its January 2018 level.

The FAO Cereal Price Index averaged 168.1 points in January, up
marginally from December. Prices of the major grains were generally
firm amid tightening export supplies and robust world demand.

The FAO Vegetable Oil Price Index rose 4.3 percent from the previous
month, led by palm oil values responding to a seasonal production
decline in the major producing countries. International soy oil prices
also rose on the back of robust import demand for South American
supplies.

The FAO Dairy Price Index rose 7.2 percent from December, reversing
seven months of falling prices. Limited export supplies – due to
strong internal demand – from Europe were the primary factor behind
this, along with anticipated seasonal tightening of export
availability from Oceania in the coming months.

The FAO Sugar Price Index rose 1.3 percent, a move largely influenced
by the appreciation of the currency (Real) of Brazil, the world’s
largest exporter, against the U.S. dollar.

The FAO Meat Price Index was almost unchanged from December. The
January value was calculated assuming stable meat prices in the United
States of America, where official data were not available due to the
government shutdown. Elsewhere, international price quotations for
bovine, pig and poultry meat remained steady, while ovine meat prices
declined in step with ample exportable supplies in Oceania.

Meanwhile, in its latest Cereal Supply and Demand Brief, also
published Thursday, FAO lifted the world’s 2018 cereal production
estimate to 2 611 million tonnes, reflecting upward revisions of
maize, wheat and rice.

Production prospects for wheat are positive for 2019, with the early
outlook pointing to significant rebounds in the European Union and the
Russian Federation.

Prospects for maize, soon to be harvested in the Southern Hemisphere,
are generally strong in Argentina and Brazil, while dry weather has
adversely affected plantings and yield prospects in South Africa.

FAO raised its estimate of world cereal utilization in the 2018/19
season to 2 657 million tonnes, which would represent a 1.7 percent
increase from the 2017/18 level. The use of grains to feed livestock
is expected to increase, with Australia needing more wheat due to the
impact of dry weather on grazing pastures and China, Mexico and the
U.S. expanding the use of coarse grains to an all-time high.

As utilization is foreseen to outpace output, world cereal stocks are
projected to fall by 45 million tonnes, or 5.6 percent, from their
record-high opening levels. This would result in the world
stocks-to-use ratio for cereals declining to 28.5 percent, down from a
nearly two-decade high of 30.8 percent in 2017/18.

International trade in all cereals will likely approach 416 million
tonnes in the 2018/19 marketing season, marginally below the 2017/18
record volume, according to FAO’s latest forecast.

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