Global food prices have declined for the second consecutive month in February 2024, reaching their lowest level since February 2021, according to the latest report from the Food and Agriculture Organization of the United Nations (FAO). The drop was mainly driven by lower prices of cereals, vegetable oils, and dairy products, while meat and sugar prices increased slightly. The FAO Food Price Index, which tracks the changes in the prices of five food commodities, averaged 117.3 points in February, down 1.5% from January and 10.5% from February 2023.
Cereal Prices Fall as Supply Outweighs Demand
The FAO Cereal Price Index fell 5% from January to 113.8 points in February, down 22.4% from its value in February 2023. The FAO attributed the decline to lower international prices of all major cereals, especially maize, wheat, and rice. The report said that the downward pressure on cereal prices was due to “ample export availabilities, especially from Argentina, Brazil, and the United States, coupled with sluggish global import demand and a generally favourable 2023/24 production outlook”.
The FAO raised its forecast for 2023 cereal output by 1.1% from 2023 to 2,840 million metric tons, mainly due to increased maize supplies in Brazil, China, and the US. The FAO also increased its estimate for 2023 cereal utilization by 0.8% to 2,819 million metric tons, reflecting higher feed and industrial use of maize. However, the FAO lowered its forecast for 2023 cereal trade by 0.7% to 466 million metric tons, reflecting reduced import demand for wheat and rice.
Vegetable Oil Prices Dip as Soy and Sunflower Oil Weaken
The FAO Vegetable Oil Price Index fell 1.3% from January to 127.6 points in February, down 11% from February 2023. The FAO said that the decrease was mainly due to lower world prices of soy, sunflower, and rapeseed oils, which more than offset a slight increase in palm oil prices. The report said that the decline in soy oil prices was driven by “improved production prospects in South America and subdued global import demand”. The report also said that sunflower oil prices fell due to “ample export availabilities, especially from the Black Sea region, and reduced import demand, particularly from India”. Rapeseed oil prices also dropped due to “seasonally slow demand in the European Union and increased crushing activity in Canada”.
The FAO expects the global production of vegetable oils to increase by 5.3% in 2023/24, reaching a record level of 250 million metric tons. The FAO also expects the global consumption of vegetable oils to increase by 4.4% in 2023/24, reaching 248 million metric tons. The FAO said that the growth in consumption will be driven by “rising food, feed, and industrial uses, especially for biodiesel production”.
Dairy Prices Edge Up as Butter Demand Rises
The FAO Dairy Price Index rose 0.6% from January to 112.1 points in February, down 13.4% from February 2023. The FAO said that the increase was mainly due to higher prices of butter, which were supported by “higher import demand from Asian buyers and seasonally declining milk production in Oceania”. The report also said that cheese prices increased slightly due to “firm import demand from China and Japan”. However, the report said that skim milk powder and whole milk powder prices declined due to “ample export supplies and reduced import demand”.
The FAO expects the global production of milk to increase by 1.6% in 2023, reaching 876 million metric tons. The FAO also expects the global trade of dairy products to increase by 1.9% in 2023, reaching 84 million metric tons. The FAO said that the growth in trade will be driven by “increased demand from Asia, especially China, and the Middle East and North Africa region”.
Meat Prices Rise as Poultry and Bovine Meat Strengthen
The FAO Meat Price Index rose 1.8% from January to 95.5 points in February, down 0.8% from February 2023. The FAO said that the increase was mainly due to higher prices of poultry and bovine meat, while pig and ovine meat prices remained stable. The report said that poultry meat prices rose due to “a rise in demand from leading importing countries, especially China, Japan, and Mexico”. The report also said that bovine meat prices rose due to “tight export supplies from Oceania and increased import demand from China and the United States”.
The FAO expects the global production of meat to increase by 1.4% in 2023, reaching 346 million metric tons. The FAO also expects the global consumption of meat to increase by 1.3% in 2023, reaching 345 million metric tons. The FAO said that the growth in consumption will be driven by “rising incomes and population growth in developing countries, especially in Asia and Africa”.
Sugar Prices Increase as Dry Weather Affects Brazil
The FAO Sugar Price Index rose 0.6% from January to 181.8 points in February, up 28.6% from February 2023. The FAO said that the increase was mainly due to lower production prospects in Brazil, the world’s largest sugar producer and exporter, which has been affected by dry weather conditions. The report said that the lower supply outlook in Brazil was partly offset by “improved production prospects in India and Thailand, as well as reduced import demand from China and Indonesia”.
According to a web search result, the FAO expects the global production of sugar to increase by 3.4% in 2023/24, reaching 186 million metric tons. The FAO also expects the global consumption of sugar to increase by 2.1% in 2023/24, reaching 185 million metric tons. The FAO said that the growth in consumption will be driven by “recovering demand from the food and beverage industry, as well as the ethanol sector”.
Global food prices have reached their lowest level in three years in February 2024, reflecting the supply and demand dynamics of various food commodities. The FAO Food Price Index, which tracks the changes in the prices of five food commodities, averaged 117.3 points in February, down 1.5% from January and 10.5% from February 2023. The FAO said that the decline was mainly due to lower prices of cereals, vegetable oils, and dairy products, while meat and sugar prices increased slightly. The FAO also provided its outlook for the global production, consumption, and trade of food commodities in 2023 and 2023/24, highlighting the factors that could influence the food market in the near future.