Asia Pacific Food Situation Update - February 2012
Food prices climb for the first time since July
A sixth-month downward slide in food prices came to an end in January as the FAO Food Price Index rose for the first time since July 2011. FAO analysts cited poor weather as the possible main factor. The Index stood at 214, a 4 point or 2 percent increase over December. Nonetheless, food prices were still 7 percent below the levels recorded in January 2011. The increase was propelled by rising prices in every commodities group measured by FAO, with oils and fats recording the largest increases.
“Different factors are at play in each of the commodity groups,” said Senior Grains Economist Abdolreza Abbassian, who mentioned bad weather in Europe and South America among several reasons. “But the increase, despite an expected record harvest and an improved stocks situation, and after six months of falling or stable prices, highlights the unpredictability prevailing in global food markets.”
Cereals often have the most significant impact on overall food prices, and the FAO Cereal Price Index climbed by 2.3 percent in January, averaging 223 points. Maize and other coarse grains showed the biggest price gains, rising by 6 percent on tight global supplies and concerns over crop prospects in South America. Wheat was up 1.5 percent on fears of depleting export supplies from the Russian Federation and bad weather in other regions. Rice prices, on the other hand, fell by 3 percent on seasonal harvests and strong competition among producing countries. Rice has been trending downward since November.
Strong demand for palm and soy oils drove the FAO Oils/Fats Price Index up 3 percent. The FAO Dairy Price Index inched up 2.5 percent reversing a five-month downward trend. Sugar also was up, as the FAO Sugar Price Index increased by 2.3 percent points, although sugar is 20 percent cheaper than in January 2011.
Good harvests in the EU, India, the Russian Federation and Thailand blunted concerns over bad weather in Brazil, the world’s largest sugar producer. The FAO Meat Price Index rose by just one half of a percent since December. Although the price of chicken fell, pig meat prices rose by 2.8 percent as traders expected import demand from China would be strong.