Food Inflation Reasserts In February
TOME - Mar 7/25 - SNS -- Global food ingredient prices rose in February because of increases in sugar, dairy, and vegetable oil prices, according to the new Food and Agriculture Organization of the United Nations (FAO).
The FAO Food Price Index averaged 127.1 points in February, up 1.6% from the previous month and 8.2% higher than its February 2024 level.
The surge was largely driven by the FAO Sugar Price Index, which rose by 6.6% from January after three consecutive months of decline, reaching 118.5 points in February. The increase was fuelled by concerns over likely tighter global supplies for the 2024/25 season, particularly due to declining production prospects in India and adverse weather conditions affecting crops in Brazil.
The FAO Cereal Price Index edged up 0.7% in February, averaging 112.6 points. Wheat prices increased due to tighter supplies in the Russian Federation and concerns over crop conditions in eastern Europe and North America, though the overall index remained slightly below its February 2024 level. World maize prices continued to rise, underpinned by tightening supplies in Brazil and strong US export demand. By contrast, world rice prices fell by 6.8% in February due to ample exportable supplies and weak import demand.
The FAO Vegetable Oil Price Index averaged 156.0 points in February, up 2.0% from January and as much as 29.1% higher than a year earlier. The increase was largely the result of higher prices for palm, soy, and sunflower oils, driven by seasonal supply constraints in Southeast Asia and robust demand from the biodiesel sector.
The FAO Dairy Price Index increased by 4.0% from January, averaging 148.7 points. The rise was the result of higher prices across all major dairy products, including cheese and whole milk powder, as strong import demand exceeded production in key exporting regions.
The FAO Meat Price Index held steady in February, averaging 118.0 points, down marginally by 0.1% from January. While international poultry and pig meat prices eased due to abundant supplies, ovine and bovine meat prices remained firm, supported by strong global import demand.
Modest Icrease In Wheat Output
FAO has also released its latest Cereal Supply and Demand Brief, forecasting global wheat production in 2025 at 796 million MT, marking a modest increase of nearly 1% from the previous year.
This forecast is underpinned by anticipated production gains in the European Union, particularly in France and Germany, where soft wheat sowings are expected to increase. However, challenges such as dry conditions in Eastern Europe and excessive rainfall in Western regions could affect yield improvements. In the United States of America, wheat acreage is expected to expand, although yields may decline slightly due to drought conditions impacting winter crops.
Rice production is forecast to hit a record high of 543 million MT (in milled equivalent) in 2024-25, driven by positive crop prospects in India and favourable growing conditions in Cambodia and Myanmar.
FAO has raised its estimate for global cereal production in 2024 to 2,842 million MT, a slight uptick from the 2023 level.
Global cereal utilization for the 2024-25 marketing year is forecast at 2,867 million MT, a 1.0% increase from the previous year, driven by an expected record rice consumption. Wheat utilization is anticipated to remain stable, as a slight decrease in food consumption is balanced by an increase in industrial use, particularly in China.
FAO predicts a 1.9% decline in global cereal stocks, with ending stocks for 2025 forecast at 869.3 million MT, with higher stocks in the Russian Federation and Ukraine expected to be offset by reductions elsewhere.
The global stocks-to-use ratio is expected to fall to 29.9%, still indicating a comfortable supply. Additionally, FAO has revised its forecast for global cereal trade to 484.2 million MT, down 5.6% from the previous season due to changing export dynamics.
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