FAO Food Price Index turns lower in October

Intense exporter competition and sluggish import demand behind declines in pork prices.

The U.N. Food & Agriculture Organization's (FAO) Food Price Index averaged 176.4 points in October 2017, down 2.2 points (1.3%) from September. Although this was up four points (2.5%) from a year ago, it remained 27% below the all-time high of 240 points registered in February 2011.

With the exception of cereals, all of the other indices used in the calculation of the Food Price Index fell in October, FAO said.

The FAO Cereal Price Index averaged 152.8 points in October, up slightly from September and 10.5 points (7.4%) higher than the same period last year.

“Among the major cereals, wheat quotations were generally lower, pressured by large exportable supplies from the back region and increased competition among exporters,” FAO noted. “Maize prices increased slightly in the U.S., although those from South America were weighed down by large supplies.”

Rice prices also strengthened in October amid seasonally tight Japonica and fragrant supplies, with additional support for Japonica prices stemming from a series of tenders in the Far East.

The FAO Dairy Price Index averaged 214.8 points in October, down 9.4 points (4.2%) from September and marking the first drop since May 2017. At that level, the index was 32 points (17.5%) above its value in October 2016 but 22% below the peak reached in February 2014.

“International quotations for butter, skim milk powder (SMP) and whole milk powder (WMP) eased in October, while those of cheese remained more stable,” FAO reported. “Butter and WMP prices fell as importers held back on purchases, awaiting arrival of new supplies from Oceania.”

Low demand and ample intervention stocks in the European Union hastened the decline of SMP prices, FAO added. However, a balanced cheese market contributed to more stable cheese quotations.

The FAO Meat Price Index averaged 172.7 points in October, down 1.6 points (0.9%) from September and continuing a trend of moderate declines that began in July this year.

“International prices of pig and ovine meat declined in October, while those of bovine meat increased and of poultry were stable.”

FAO said intense competition among exporters and sluggish import demand has been behind the declines in pork prices observed in recent months. However, bovine meat prices rose for the third consecutive month due to limited spot offers from Oceania.

“A seasonal increase in ovine meat supplies in Oceania pushed down ovine prices, while poultry meat markets remained well balanced.”

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