Rebound in dairy quotations drive global food commodity prices higher in January

The Food Price Index averaged 164.8 points in January 2019, up 1.8 percent from December 2018 but still 2.2 percent below the corresponding month last year.

The Cereal Price Index averaged 168.1 points in January, up marginally from December and 7.3 percent above January 2018. Except for rice, the prices of other major cereals remained generally firm, supported by the decline in global production in 2018, tightening export supplies and robust world demand. January, however, was a particularly quiet month for wheat and maize markets, in part due to the absence of several key reports in the United States because of the US Government shutdown. Nonetheless, grain prices were up during the month, with maize values rising the most, in reaction to adverse weather conditions in South America.

The Vegetable Oil Price Index averaged 131.2 points in January, rising 4.3 percent from the previous month and marking the second consecutive increase after a protracted fall. The increase was led by palm oil values responding to a seasonal production decline in the major producing countries. International soy oil prices also rose on the back of robust import demand for South American supplies.

The Dairy Price Index averaged 182.1 point in January, up 7.2 percent from December 2018. The rebound followed seven months of falling prices. All dairy products represented in the index registered higher prices in January, with Skim Milk Powder (SMP) quotations rising by as much as 16.5 percent month-on-month. The sharp increase resulted from limited export supplies from Europe, due to strong internal demand, and expectations of a seasonal tightening of export availability from Oceania in the coming months.

The Sugar Price Index averaged 181.9 points in January, up 1.3 percent from December 2018. International sugar prices were largely influenced by movements in the Brazilian currency (Real), which gained strength against the U.S. dollar. A stronger Real supports sugar prices because it limits the supply of Brazilian sugar to the world market, as domestic producers process sugarcane into ethanol for local sale.

The Meat Price Index averaged 162.9 points in January, almost unchanged from December 2018. In view of the non-availability of data from official sources in the United States because of the Government shutdown, the January value of the Index was calculated assuming stable prices for meat products in the United States. Elsewhere, international price quotations for bovine, pig and poultry meat remained steady. However, ovine meat prices declined by as much as 8.4 percent month-on-month, pressured by ample exportable supplies in Oceania.