Food Commodities Remain Stable in September

September was another good month for the food industry as international food commodity prices tracked in the UN’s Food and Agriculture Organization (FAO) Food Price Index averaged 156.3 points in September 2015, up one point from its sharply reduced August value, but still 18.9 percent less than one year ago.

The Cereal Price Index averaged 154.8 points in September, nearly unchanged from August and 13.1 percent down year-on-year. International cereal prices have been under downward pressure since the beginning of 2015, amid large inventories and generally good crop prospects. Wheat is now over 20 percent cheaper than in September last year, following this season’s record production. Influenced by an expected decline in world maize production, coarse grains quotations have been more resilient, subsiding only 1.4 percent compared to September 2014. Despite prospects of crop shortfalls, rice quotations have continued to slide, albeit by only 1.7 percent in September, extending the declining trend to a thirtieth consecutive month.

The Vegetable Oil price index averaged 134.2 points, marginally below August but the lowest level since March 2009. The September decline was mainly driven by lower palm oil quotations, reflecting abundant export availabilities, especially in Malaysia where a weak currency is sustaining exports. International soy oil prices also declined, on ample supplies in South America and a favorable 2015/16 global production outlook. Prices of rape and sunflower seed oils increased somewhat on concerns about lower than anticipated global availabilities.

The Dairy Price Index averaged 142.3 points, up 6.8 points from August. The rise followed a sharp fall in the Index in the previous month. While the prices of all dairy commodities firmed, those of milk powders exhibited the largest increase due to higher quotations from New Zealand, where a substantial reduction in payouts has caused farmers to scale-back production.

The Sugar Price Index averaged 168.4 points, up 5.2 points from August. The increase was largely weather driven, under the El Niño negative effects. In Brazil, the world’s largest sugar producer, excessive precipitation in the main producing region significantly curtailed sugarcane harvesting, while in India, the world’s second-largest producer, below average monsoon rains impacted negatively on cane yields. Official reports in Thailand, the world’s second-largest sugar exporter, pointed to a smaller sugarcane harvest in 2015/16, as result of a protracted drought.

The Meat Price Index averaged 170.5 points, almost unchanged from August. The Index has moved within a narrow range since March 2015. Over this 7-month period, prices of poultry declined, supported by lower feed costs, while strong demand, combined with limited supplies, caused those of bovine meat to rise; meanwhile, quotations for pig meat were relatively stable.