GLOBAL-The Food and Agriculture Organization of the United Nations (FAO) food price index marginally declined in February while wheat prices rose fractionally.
The FAO Food Price Index tracks monthly changes in the international prices of commonly-traded food commodities.
This month’s fall indicates another reduction for the 11th consecutive month, according to the 3rd March 2023 report.
In February, the FFPI averaged 129.8 points, a marginal 0.6% decrease from January and down nearly 19% from its peak in March 2022.
The decline in the index reflected drops in quotations for vegetable oils and dairy products that more than offset a steep rise in sugar prices.
While food prices register another drop for the 11th month since hitting a peak at the onset of the Ukraine war, food security is still a concern globally that calls for investment in the industry.
For example, drought remains an issue worldwide, with La Niña still affecting Argentine soybean production and the world still recovering from covid19 effects and the Ukraine war.
On the contrary, the FAO Cereal Price Index remained relatively unchanged from January.
The index averaged 147.3 points in February, down just 0.1 percent from January and 2.0 points (1.4 percent) above its level in February 2022.
International wheat prices rose marginally (0.3 percent) during the month, after falling for three consecutive months.
The slight increase in wheat prices mostly reflected prevailing concerns over dry conditions in key production areas of Hard Red Winter wheat in the United States of America.
Additionally, robust demand from Australia and stiff competition among exporters also contributed to the price gains.
Moreover, gains in wheat prices were limited by expectations of the extension of the grain corridor deal in the Black Sea.
Russian wheat prices declined last week, and Turkey’s foreign minister said Ankara is working hard to extend the black sea grains deal, which expires in mid-March.
However, the concerns around the possible failure to extend this safe shipping agreement could inspire inflation expectations, leading to an increase in wheat prices in the foreseeable future.
Vegetable oil prices offset sugar price rises
On the other hand, the FAO Vegetable Oil Price Index declined by a significant percentage (3.2%) from January, with the world prices of palm, soy, sunflower seed, and rapeseed oils all lowering.
In contrast, the FAO Sugar Price Index rose 6.9% from January to levels not seen in the last six years. This significant decline is largely due to the 2022-23 Indian sugar production forecast.
Nevertheless, favorable crop prospects in other suppliers, lower international crude oil prices, and ethanol prices in Brazil limited further upward pressure on sugar prices, according to FAO.
On the other hand, the FAO Dairy Price Index and international rice prices declined 2.7% and 1%, respectively, during the month.
The FAO Meat Price Index also remained almost unchanged from January. World poultry prices continued to decline while international pig meat prices rose, mostly due to concerns over tighter export availabilities in Europe.
Meat and dairy prices have a lot to do with the international prices of grains, which are the primary ingredients in feed production.