FAO Food Price Index: Sugar and dairy push February rise as wheat and rice yields outlook grows
The FAO Food Price Index rose in February, with surges in sugar, dairy, and vegetable oil prices driving the increase. The price of globally traded food commodities averaged 127.1 points in February, up 1.6% from the previous month and 8.2% higher than its February 2024 benchmark, according to the latest report.
After declining for three months, the sugar price index increased by 6.6% from January. The FAO attributes the spike to concerns over limited supplies for the 2024/25 season due to dwindling production in India and extreme weather conditions impacting harvests in Brazil.
The dairy price index rose 4% from January, reflecting higher prices across major dairy categories such as cheese and milk powder as import demand exceeded supply in key producing regions.
Additionally, the vegetable oil index was 29% higher than the previous year, led by higher costs for palm, soy, and sunflower oils. The price hikes are reportedly caused by limited seasonal supplies in Southeast Asia and strong demand from the biodiesel sector.
Cereal prices surged by 0.7%, with tighter supplies in Russia increasing wheat prices. Global maize prices continued to increase, given lowered supplies in Brazil and robust export demand in the US. On the other hand, rice prices dipped by 6.8% due to weak import demand and surplus exportable supplies.
The meat price index remained steady last month as global poultry and pig meat prices stabilized due to abundant supplies, and ovine and bovine meat costs remained robust in light of strong global demand.
Forecasts for cereal production in 2025
The FAO has also predicted that wheat production this year will reach 796 million metric tons, recording a small increase of about one percent from last year. This prediction is supported by production gains expected in the EU, specifically in France and Germany, where soft wheat sowings are likely to increase.
However, the organization notes that challenges like dry weather conditions in Eastern Europe and excessive rain in the Western region could hinder yields. The FAO expects wheat acreage to expand in the US while predicting a decline in yields due to drought conditions affecting winter crops.
Rice production is likely to reach a record-high 543 million metric tons in 2024/2025, with strong crop prospects predicted in India and beneficial growing conditions in Cambodia and Myanmar.
The UN agency has forecast global cereal utilization for the 2024/25 marketing year at 2,867 million metric tons, marking a 1% increase from the previous year due to an expected record rice consumption. Wheat utilization is predicted to remain stable as a slight decrease in food is offset by increased industrial use, particularly in China.
International cereal stocks are anticipated to dip 1.9%, ending this year at 869.3 million metric tons. Additionally, the revised forecast for global cereal trade has been set at 484.2 million metric tons, marking a 5.6% decline from the previous season due to changes in export dynamics.
Global crop prospects
The FAO has also released a new edition of its Crop Prospects and Food Situation report, outlining global cereal production trends for 2025.
Long spells of dry weather in North Africa are lowering expectations for cereal yields in Africa. At the same time, Southern Africa is set for a rebound in light of improved rainfall after sharp declines in 2024.
Asia presents mixed fortunes. Wheat production in Far East Asia is expected to grow, driven by extensive plantings and favorable weather. In contrast, Near East Asia has seen low rainfall since late 2024, which could push wheat harvests below the five-year average.
In Latin America and the Caribbean, weather conditions are affecting maize production. South America faces a risk of stunt disease outbreaks, but strong yields in Brazil are anticipated to keep overall output above average.
