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Global food commodity prices hit record high in February

Global food prices skyrocket
Large increases in prices for vegetable oils and dairy propelled global food commodity prices to their highest levels since February 2011, according to latest data from the UN’s Food and Agriculture Organization (FAO).

The FAO Food Price Index, which tracks monthly changes in the international prices of commonly traded food commodities, averaged 140.7 points in February 2022, up 3.9% from January and as much as 20.7% above its level one year ago.

“Concerns over crop conditions and adequate export availabilities explain only a part of the current global food price increases,” said FAO economist Upali Galketi Aratchilage. “A much bigger push for food price inflation comes from outside food production, particularly the energy, fertilizer and feed sectors. All these factors tend to squeeze profit margins of food producers, discouraging them from investing and expanding production.”

The Vegetable Oil Price Index averaged 201.7 points in February, up 8.5% from the previous month to reach a new record high. The continued price strength mostly stemmed from rising prices for palm, soy and sunflower oil. The sharp increase in the vegetable price index was principally driven by sustained global import demand, which coincided with a few supply-side factors, including reduced export availabilities of palm oil from Indonesia, the world’s leading exporter, lower soybean production prospects in South America, and concerns about lower sunflower oil exports due to disruptions in the Black Sea region.

The Cereal Price Index averaged 144.8 points in February, up 3% from January and 14.8% from one year ago. In February, prices of all major cereals increased from their respective values last month. World wheat prices increased by 2.1%, largely reflecting new global supply uncertainties amid disruptions in the Black Sea region that could potentially hinder exports from Ukraine and the Russian Federation, two major wheat exporters. Coarse grain export prices also rose by 4.7%. World maize prices increased by 5.1% from the previous month, underpinned by a combination of continued crop condition concerns in Argentina and Brazil, rising wheat prices, and uncertainty regarding maize exports from Ukraine, a major exporter. Among other coarse grains, both sorghum and barley export prices firmed month-on-month as well, gaining 5.9% and 2.7%, respectively. International rice prices increased by 1.1% in February.

The Dairy Price Index averaged 141.1 points in February, up 6.4% from January, marking the sixth successive monthly increase and placing the index 24.8% above its value in the corresponding month last year. International quotations for all dairy products represented in the index firmed, underpinned by the continued tightening of global markets on the back of lower than expected milk supplies in Western Europe and Oceania, as well as persistent import demand, especially from North Asia and the Middle East, which led to steep increases in whole milk powder and cheese price quotations. International skim milk powder prices rose significantly as well, reflecting a lower volume of milk deliveries for drying plants in Western Europe, while butter prices received a boost from high demand for spot supplies.

The Sugar Price Index averaged 110.6 points in February, down 1.9% from January, marking the third consecutive monthly decline and reaching its lowest level since last July. Favorable production prospects in major exporting countries, notably India and Thailand, coupled with improved growing conditions in Brazil continued to weigh on world sugar prices. Ethanol prices in Brazil declined for the third successive month in February on the back of reduced domestic demand, exerting further downward pressure on world sugar prices.

The Meat Price Index averaged 112.8 points in February, up 1.1% from the previous month and 15.3% from its level one year ago. In February, international bovine meat quotations reached a new record high amid strong global import demand and tight supplies of slaughter-ready cattle in Brazil and high demand for herd rebuilding in Australia. While pig meat prices edged up, those of ovine and poultry meat declined, in part due, respectively, to high exportable supplies in Oceania and reduced imports by China following the end of the Spring Festival.

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