Global food prices see slight decline in October

Onome Amuge

The benchmark index of international food commodity prices declined slightly in October, down 0.5 per cent from September, with dairy products being the only index to rise,according to the Food and Agriculture Organisation (FAO).

The FAO Food Price Index, which tracks monthly changes in the international prices of a set of globally-traded food commodities, averaged 120.6 points, down 10.9 per cent from the same period last year

The FAO Cereal Price Index dropped 1.0 per cent from the previous month, led by a 2.0% decline in international rice prices due to weak import demand. Wheat prices dropped 1.9 per cent due to ample supplies from the U.S and competition among exporters.

The FAO Vegetable Oil Price Index decreased by 0.7 per cent from September, driven by lower world palm oil prices due to higher seasonal outputs and weak global import demand. This outweighed higher soy, sunflower and rapeseed oil prices. Soy oil prices increased due to strong demand from the biodiesel industry

The FAO Sugar Price Index fell 2.2 per cent from the previous month but was still 46.6% higher than a year ago, with the October decline driven by Brazil’s strong pace of production, though concerns about tighter global supply in the coming year prevented further price drops.

The FAO Meat Price Index declined by 0.6%, led by lower international pig meat prices due to weak import demand from East Asia, more than offsetting slight increases in poultry, bovine and ovine meat prices.

In contrast, the FAO Dairy Price Index rose 2.2 per cent in October, ending nine months of declines. World milk powder prices increased the most, driven by strong import demand for both near-term and longer-term supplies as well as uncertainty over the impact of El Niño weather on future milk production in Oceania.

“In a new Cereal Supply and Demand Brief, FAO maintained its 2023 world cereal production forecast at 2.819 billion tonnes, a record high. There were some adjustments to country-level figures, including higher coarse grain production in China and most of West Africa, and lower forecasts for the United States and the European Union. Wheat output forecasts were raised for Iraq and the United States but lowered for the European Union and Kazakhstan. World rice production in 2023/24 is forecast to increase slightly from the previous year

World cereal utilisation in 2023/24 is forecast at 2.810 billion tonnes, exceeding the previous year’s total. Wheat and coarse grain utilisation is expected to surpass the 2022/23 level while rice utilization is forecast to remain unchanged.

According to FAO, the world cereals stocks-to-use ratio for 2023/24 is forecast to stand at 30.7 per cent, only slightly above the previous year’s level of 30.5 per cent. The report notes that this would represent a comfortable supply situation from a historical perspective. Global cereal trade in 2023/24 is forecast at 469 million tonnes, 1.6 per cent below the previous year.