Food & Climate
The FAO Food Price Index, the benchmark for world food commodity prices, declined in January, a result favorable weather in Brazil, and the Indian Government’s decision to resume sugar exports.
The world food commodity prices, declined in January averaging 124.9 points during the month, down 1.6% from its December level. The drop was driven by significant decreases in the international quotations for vegetable oils and sugar, the Food and Agriculture Organization of the United Nations (FAO) reported Friday, according a statement received by “Food & Climate” platform.
The index, which tracks monthly changes in the international prices of a set of globally-traded food commodities, was 6.2% higher than its corresponding level one year ago but remained 22% below its peak reached in March 2022.
Brazilian sugar
The FAO Sugar Price Index was down 6.8% from December and 18.5% from its year-earlier level, mainly due to improved global supply prospects as a result of generally favorable weather in Brazil and the Indian Government’s decision to resume sugar exports.
Last November, organization of sugarcane producers associations Orplana expected that Brazil would produce 582mn metric tonnes (t) the 2025-26 crop, 1.35% below the 2024-25 estimate of 590mn t due to the historic drought and a surge in wildfires.
Dryer weather that punished the region in recent months hindered sugarcane development. Meanwhile, a spate of fires destroyed a portion of sugarcane fields. Damage to plants in different stages of regrowth should result in younger and poorer quality crops in the next cycle.
Orplana estimates that 414,000 hectares of sugarcane and sugarcane regrowth areas were harmed by recent fires.
Even if rainfall normalizes as of October, mills will have to give time for the sugarcane to appropriately grow and develop before the cutting state, according to agricultural consulting firm Datagro’s president Plinio Nastari.
Fire damage to plants with 1-5 months of development is likely to cut agricultural and industrial income, Nastari said during a Datagro conference in October, according to “Argus”.
The FAO Vegetable Oil Price Index decreased by 5.6% from the previous month, reversing a recent increase, though it remained 24.9% higher than a year ago.
The decline in January was mainly driven by lower world prices of palm and rapeseed oils, while those for soy and sunflower oils remained stable.
The FAO Meat Price Index also dropped, falling by 1.7% in January, as lower international ovine, pig and poultry meat prices outweighed an increase in bovine meat quotations.
The world food commodity prices which increased
Meanwhile, some world food commodity prices which increased included cereal and dairy.
The FAO Cereal Price Index increased by 0.3% from December but remained 6.9% below its January 2024 level. Wheat export prices dropped only slightly, while maize prices increased, partly due to lower production and stock forecasts for the United States of America.
The FAO All Rice Price Index declined by 4.7% in January amid ample exportable supplies.
The FAO Dairy Price Index increased by 2.4% from December and was up 20.4% from its January 2024 level.
The rise was driven by a 7.6% monthly surge in international cheese quotations, which outweighed declines in butter and milk powder prices.
FAO also released a new Cereal Supply and Demand Brief on Friday, with fresh insights on cropping trends in 2025.
The winter wheat planting season in the northern hemisphere concluded in January, with early indications pointing to increased sowings in France, Germany and the United Kingdom and a reduction in the Russian Federation, all influenced by weather conditions.
Maize harvests in the southern hemisphere will begin in the second quarter of 2025, with early indications suggesting improved yields in Argentina and Brazil, while record-high maize prices have driven an increase in plantings in South Africa.
FAO has raised its forecast for world cereal utilization in 2024/25, now estimated to rise by 0.9% to 2 869 million tonnes, primarily driven by higher expected use of maize for animal feed.
World cereal stocks are now predicted to decline by 2.2% by the close of seasons in 2025, mostly due to an anticipated significant contraction in maize stocks in the United States of America. The global cereal stocks-to-use ratio in 2024/25 is expected to fall but to still remain at a “comfortable level” of 29.8%.
International trade in cereals in 2024/25 is forecast to contract by 5.6% compared to the previous year to 483.5 million tonnes, largely due to lower demand from China for barley, maize and wheat.
FAO has also revised its forecast for global production in 2024, lowering it to just under 2 841 million tonnes, a 0.6 percent drop from 2023. The new forecast reflects a significant reduction in maize output in the United States of America, where late-season moisture stress curbed yields.
At the same time, official production estimates for rice in China, Mali, Nepal and Viet Nam have come in higher than anticipated, resulting in a new global rice output forecast of 539.4 million tonnes in 2024/25, a 0.9% annual increase and an all-time high.