FAO Food Price Index down for September: Major commodity price drop, sugar stays firm

08 Oct 2018 --- Food commodity prices fell in September with the FAO Food Price Index (FFPI) averaging 165.4 points last month, down 2.3 points (1.4 percent) from August and 13 points (7.4 percent) below its level during the same time the previous year. Only the sugar price index firmed in September, whereas the values of the other sub-indices, led by cereals, dropped from the previous month.

The FAO Cereal Price Index averaged almost 164 points in September, a drop of 4.7 points (2.8 percent) from August, but still 12 points (8 percent) above its September 2017 level.

The sharpest month-on-month decline among cereals concerned maize export quotations, which fell by at least 4 percent from August, mostly on expectations of a very large crop in the US and ample supply prospects globally.

Wheat price quotations, which rose sharply in August, also fell in September, mainly on continued strong sales and shipments from Russia. International rice prices eased for the third successive month, even though an appreciation of the Thai Baht and expectations of sales to the Philippines limited the September decline to around 1 percent.

FAO Vegetable Oil Price Index
The FAO Vegetable Oil Price Index averaged 134.9 points in September, down 3.2 points (or 2.3 percent) from August which represents falling for the eighth month in succession. The Index has reached a three-year low.

Prices weakened across the vegetable oil sector, with palm oil registering the most notable decline. Large inventories held in major exporting countries continued to weigh on palm oil values, which recorded a 25 percent drop compared to the corresponding month of last year.

International soy and rapeseed oil quotations also fell, underpinned by subdued global import demand, while the arrival of ample new-crop supplies in the Black Sea region exerted downward pressure on sunflower oil prices.

FAO Dairy Price Index
The FAO Dairy Price Index averaged 191.5 points in September, down 4.7 points (2.4 percent) from the previous month, continuing the downward trend for the fourth consecutive month. In September, international prices of butter, cheese and Whole Milk Powder (WMP) declined while those of Skim Milk Powder (SMP) recovered.

The potential for much larger export availabilities weighed on international prices of butter, cheese, and WMP. However, SMP prices registered another intermittent recovery in September, resulting in a 16.2 percent gain since the start of the year, primarily underpinned by stronger demand for freshly manufactured milk powder.

FAO Meat Price Index
The FAO Meat Price Index averaged 166.2 points in September, down marginally from its revised value for August. International prices of bovine and pig meat remained mostly stable, while those of ovine meat and poultry rose.

International prices of ovine meat increased for the fourth consecutive month, reflecting continued supply limitations from Oceania and strong import demand from Asia. Robust demand amid short-term supply constraints, notably in Brazil, also contributed to somewhat firmer poultry prices. However, ample export availabilities in Oceania and the US kept bovine prices under downward pressure, while new cases of African swine fever and associated import restrictions, weighed on pigmeat values.

Unlike for other commodity groups, most prices utilized in the calculation of the FAO Meat Price Index are not available when the FAO Food Price Index is computed and published; therefore, the value of the Meat Price Index for the most recent months is derived from a mixture of projected and observed prices. This can, at times, require significant revisions in the final value of the FAO Meat Price Index which could in turn influence the value of the FAO Food Price Index.

FAO Sugar Price Index
The FAO Sugar Price Index averaged 161.4 points in September, up 4 points (2.6 percent) from August, but still almost 43 percent below its level in the corresponding month last year.

The increase in September was linked mainly to the ongoing sugar harvesting operations in Brazil, the world’s largest sugar producer, and exporter. Drought conditions in Brazil during the critical growing season are seen to have had negative impacts on sugarcane yields, with harvested cane volumes falling below expectations.

Furthermore, rising concerns over crop prospects in the South and South-East Asian region, notably in India and Indonesia, due to monsoon rainfalls falling below normal levels, provided additional upward support to International sugar price quotations.

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