Global food prices continue to drop, but at a slower pace

Global food prices continue to drop, but at a slower pace, with prices for sugar, cereal, vegetable oil and meat down while dairy products went up in price.

The UN food price index fell 0.5 per cent in October from September to 120.6 points, its lowest level since March 2021. It was 14.8 points, or 10.9 per cent, below its level a year ago.

The slight drop in October reflects declines in the price indices for sugar, cereals, vegetable oils and meat, while the index for dairy products rebounded, the Food and Agriculture Organization (FAO) of the United Nations said.

Wheat prices fell by 1.9 per cent in October because of higher-than-expected supplies in the US and strong competition among exporters, and rice prices dropped 2 per cent.

As for vegetable oils, a slight fall in that price index mainly reflected lower world palm oil prices, more than offsetting higher prices of soy, sunflower and rapeseed oils.

The FAO Dairy Price Index rose 2.2 per cent in October from September, following nine months of consecutive declines, but was still down 20.1 per cent from its value a year ago. World milk powder prices increased the most, mainly driven by surges in import demand for both near- and longer-term supplies, especially from Northeast Asia.

Tight milk supplies in Western Europe and some uncertainty over the impact of the El Niño weather conditions on the upcoming milk production in Oceania added further downward pressure on prices.

Global butter prices also rose, boosted by increased sales ahead of the winter holidays in Western Europe and higher import demand from Northeast Asia. By contrast, international cheese prices dropped slightly as the euro weakened against the dollar, and because of higher exports from Oceania.

Meanwhile, FAO Meat Price Index fell 0.6%, the fourth monthly decline, leaving it 3.4 per cent below its value a year ago.

In October, international pig meat prices fell for a third month, driven by persistently sluggish import demand, especially from some East Asian countries, while some leading suppliers had high exporting capabilities.

By contrast, world poultry meat prices rebounded slightly, as avian flu outbreaks continued to constrain supplies from several world leading suppliers and consumer demand stayed robust, because poultry is more affordable than other meat.

International beef and lamb prices also increased slightly, reflecting robust import demand from some leading importers, despite ample supplies of beef from Australia and Brazil and lamb from Oceania.

The FAO Sugar Price Index dropped 2.2 per cent in October after two consecutive monthly increases, but remained 46.6 per cent above the level a year earlier.

The decline was mainly driven by strong production in Brazil, despite the negative impact of rains on sugarcane crushing in the first half of October. The weakening of the Brazilian real against the US dollar and lower ethanol prices in Brazil also weighed on world sugar prices. However, persistent concerns over a tighter global supply outlook in the recently started 2023-24 season, together with shipment delays from Brazil, capped the declines in world sugar prices.