F.A.O. Food Price Index rises in February
March 8, 2012
by Eric Schroeder
ROME — The Food and Agriculture Organization Food Price Index averaged 215 points in February, up 2.4 points, or about 1%, from the revised January figure.
The food price index consists of the average of five commodity group price indices (meat, dairy, cereals, oils and fats, and sugar) weighted with an average export share of each of the groups for 2002-2004. The F.A.O. said of the February results, “The increase … was mostly driven by higher prices of sugar, oils and cereals while dairy prices fell slightly after a marked rise in January.”
The F.A.O. cereal price index averaged 227 points in February, up 4.4 points, or 2%, from January and compared with 259 in February 2011.
“International wheat prices rose most followed by maize, while rice quotations were generally lower,” the F.A.O. said. “Wheat markets were supported by tightening supplies and concerns over the impact of severe cold weather on this year’s crops in Europe and the CIS. Maize prices also rose in February, mainly driven by stronger import demand in Asia and supported by weaker dollar and lower freight rates as well as concerns about crop prospects in South America. However, rice prices remained under downward pressure on generally weak import demand and stiff competition among exporters.”
The F.A.O. oils and fats index at 239 points was up 5 points, or 2%, from January. In February 2011, the index stood at 281 points.
“Poor monthly production growth in palm oil, together with the prospect of a tight supply and demand balance for total vegetable oils in 2011/12 have driven up the index,” the F.A.O. said. “In particular, lower production forecasts for soy oil, which push down expected global soy oil export availabilities to a multi-year low, have supported prices.”
The meat price index averaged 175 points in February, virtually unchanged from January but up from 171 points a year ago. The F.A.O. said pig meat prices gained 3.4% behind strong purchases by Hong Kong and recent disease outbreaks in Russia.
The dairy price index averaged 205 points in February, down 1.5 points from January and compared with 230 points in February 2011. The decline reflected falling skim milk powder and casein quotes, which fell by nearly 2%, the F.A.O. said. At the same time, prices of butter, cheese and whole milk powder remained relatively steady.
The sugar price index rose to 342 points in February, up 8 points, or 2.4%, from January. The index still was sharply lower than in February 2011, though, when it averaged 418 points.
“Last month’s increase was largely driven by unfavorable weather conditions in Brazil, the world’s largest producer and exporter of sugar, and fears that these would delay harvest and lead to short-term tightness in the market,” the F.A.O. said. “However, large production harvests in India, the E.U., Thailand and the Russian Federation kept prices from increasing further.”