GLOBAL – In a trend spanning four consecutive months, global food commodity prices have continued to retreat, with sugar prices playing a crucial role in the decline.
The Food Price Index, a comprehensive measure compiled by the Food and Agriculture Organization of the United Nations (FAO) to track five essential food commodities, registered a 10.9% decrease from the previous year in October.
This marked the fourth consecutive month of decline, with a minimal 0.5% drop compared to September.
According to historical data from FAO, the October reading of the index, standing at 120.6, was consistent with the September and August readings, making it the lowest level since March 2021 (119.2).
This suggested a significant retreat of almost 25% from the all-time high recorded in March of the previous year.
Among the five components comprising the index, dairy was the sole one to record an increase in October compared to the previous month, breaking a nine-month streak of declines mainly attributed to the cost of milk.
In contrast, sugar prices were influenced by increased output in Brazil.
In October, the FAO’s sugar sub-index experienced a 2.2% decrease compared to the previous month, with a reading of 159.2. However, it is important to note that sugar prices remained 46.6% higher than in October of the previous year.
The sugar index reached 162.7 in September, reaching the highest level since September 2011 (165.3). Despite the monthly decline, October’s reading of 159.2 was still at that historically high level, as indicated by FAO’s data.
FAO explained that the decrease in sugar prices in October was primarily attributed to a surge in sugar production in Brazil, despite initial challenges posed by adverse weather conditions impacting the sugarcane crushing process in the first half of the month.
Notably, ongoing concerns regarding a tighter global supply outlook in the 2023/24 season, along with shipment delays from Brazil due to logistical constraints, prevented more significant declines in world sugar prices.
In the dairy sector, prices experienced a 2.2% increase from September but pulled back by 20.1% compared to the previous year.
Factors contributing to this increase included surges in import demand for both near-term and longer-term supplies, particularly from northeast Asia.
Additionally, tight milk supplies in western Europe and concerns regarding the impact of El Niño weather conditions on future milk production in Oceania added further upward pressure on dairy prices.
Meat prices experienced a slight monthly decline of 0.6%, but a year-on-year decrease of 3.4%, partially due to lower international quotations for pork.
The fall in pork prices was primarily driven by sluggish import demand, especially from some East Asian countries, and high exportable supplies in leading pork-producing nations.
Poultry prices rebounded slightly in October, driven in part by concerns related to avian influenza outbreaks, which constrained supplies from major poultry suppliers while consumer demand remained robust due to the relative affordability of poultry meat.
Cereal prices fell by 1% month-on-month, with rice and wheat both experiencing 2% declines. Compared to October 2022, cereal prices were down 17.9%. Vegetable oils decreased by 0.7% compared to September and 20.7% compared to the previous year.