Food price index rises on back of bad weather: FAO

By Nathan Gray

- Last updated on GMT

Food price index rises on back of bad weather: FAO

Related tags Wheat Food and agriculture organization Maize Fao

Major food commodity prices rose in October, spurred by weather-driven concerns about sugar and palm oil supplies, according to the UN Food and Agriculture Organisation (FAO).

The FAO’s trade-weighted index, which tracks prices on international markets of five major food commodity groups, rose by 3.9% over the previous month of September, averaging at nearly 162 points – however food prices were still down 16% over the same period last year.

Surging sugar prices led the way for an overall index rise, said the FAO – revealing that its Sugar Price Index climbed by 17.2% from September, amid fears that excessive rains in the main growing regions in Brazil would impact the sugarcane harvest.

The sharp jump in sugar prices reversed the sub-index's decline since February, the FAO’s monthly price report added.

Meanwhile, growing concerns that El Niño may impact next year's palm oil supply in Indonesia, coupled with slow progress in soybean plantings in Brazil, led to a 6.2% in the Vegetable Oil Price Index. 

Dairy prices rose by 9.4% amid worries that milk output in New Zealand could decline.

The FAO Meat Price Index remained stable, while cereal prices rose by a modest 1.7% - pushed up in part by growing concerns over dry weather conditions affecting wheat crops in Ukraine and southern parts of the Russian Federation.

Cereal forecast

Alongside its monthly Food Price Index report, the FAO also released its latest Cereal Supply and Demand Brief​. The October report lowered its forecast for global cereal production and now projects production at 2.53 billion tonnes, 1.1% below last year's record output.

According to the FAO, half of the forecast cut reflected lower expectations for maize crops in India and Ukraine, mostly due to adverse weather, while drought in Thailand prompted a reduction in the seasonal rice harvest projection

Conversely, the forecast for global wheat production has been raised, largely reflecting a bigger harvest in the European Union than earlier anticipated, said the FAO – adding that global cereal stocks are expected to remain at a comfortable level.

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