FAO Food Price Index eases in October as dairy prices decline

Global food prices dipped in October, led lower by dairy products, averaging 27% below its all-time high reached in early 2011. The Food and Agriculture Organization’s (FAO) Food Price Index averaged 176.4 points for the month of October, down 1.3% from September while still up 2.5% from a year earlier. The FAO Food Price Index is a measure of the monthly change in international prices of a basket of food commodities.

The FAO Dairy Price Index declined 4.2% during the month, marking its first drop since May. International quotations for butter and whole milk powder eased in October, as importers held back on purchases awaiting new supplies from Oceania, while low demand and ample intervention stocks in the European Union (EU) pushed skim milk powder prices down.

The FAO Vegetable Oil, Sugar, and Meat Price Indices all declined by 1.1%, 0.7%, and 0.9%, respectively. Meanwhile, the FAO Cereal Price Index edged up a notch, 0.4% led by higher rice prices even as wheat quotations were generally lower. In fact, global cereal production in 2017 is forecast to surpass the 2016 peak by a small margin, according to FAO’s latest “Cereal Supply and Demand Brief.”

Worldwide production of coarse grains is set to reach a new record, thanks to expansion in South America and Southern Africa. Wheat production, by contrast, is forecast to decline slightly due mostly to lower harvest volumes foreseen in the United States. Global rice output, on the other hand, is expected to remain broadly stable.

FAO’s latest estimates point to a 1% expansion in world cereal utilization in the coming year, with world cereal stocks on course to set a record level by the close of seasons in 2018. Global stocks of rice and coarse grains are projected to hit record highs, while those of wheat already have.

Press release