Global food prices at highest in over 10 years

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Global food commodity prices rose in October reaching their highest level since July 2011, the Food and Agriculture Organisation of the United Nations (FAO) has said.

The rise was led by vegetable oil and cereals, according to details highlighted in the FAO Food Price Index report released on Thursday.

The index tracks the international prices of the most commonly traded food commodities.

The FAO Food Price Index averaged 133.2 points in October 2021, up 3.0 per cent from September and 31.3 per cent from October 2020.

“After rising for a third consecutive month, the Food Price Index in October stood at its highest level since July 2011.

“The latest month-on-month increase was primarily led by continued strength in the world prices of vegetable oils and cereals,” it said.

The report said the FAO Vegetable Oil Price Index averaged 184.8 points in October, up 9.6 per cent month-on-month and marking an all-time high.

“The increase was driven by firmer price quotations for palm, soy, sunflower and rapeseed oils. International palm oil prices increased for a fourth consecutive month in October, largely underpinned by persisting concerns over subdued output in Malaysia due to ongoing migrant labour shortages,” the report said.

“In the meantime, world prices of palm, soy and sunflower oils received support from reviving global import demand, particularly from India that lowered import tariffs further on edible oils. As for rapeseed oil, the continued strength in international values chiefly stemmed from protracted global supply-demand tightness.”

Noticeably, it said rising crude oil prices also lent support to vegetable oil values.

According to the report, the FAO Cereal Price Index averaged 137.1 points in October, up 3.2 per cent from September and 25.1 points (22.4 per cent) above its level one year ago.

Other indices rise

In the report, the FAO Dairy Price Index averaged 120.7 points in October, up 2.2 per cent from September and 15.5 per cent above its level in the corresponding month a year ago.

“In October, international price quotations for butter, skim milk powder and whole milk powder rose steeply for the second consecutive month, underpinned by firm global import demand amid buyers’ efforts to secure supplies to build stocks.

“Seasonally low milk supplies and tight inventories in Europe and a slower start than earlier anticipated to the new milk production season in Oceania also lent support to world milk prices.

“By contrast, cheese prices remained largely stable, as supplies from major producers were adequate to meet global import demand,” it said.

According to the report, the FAO Meat Price Index averaged 112.1 points in October, down 0.7 per cent from its revised value in September, marking the third monthly decline, though still 22.1 per cent above its value in the corresponding month last year.

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“In October, international quotations for pig meat fell, principally underpinned by reduced purchases from China.

“Bovine meat prices also fell, reflecting a sharp decline in quotations for supplies from Brazil amid market uncertainty surrounding import suspensions by its leading trading partners over mad-cow disease concerns.

“By contrast, the report said poultry meat quotations rose, boosted by high global demand, while production expansions remained weak due to high feed costs and avian flu outbreaks, especially in Europe.

“World ovine meat prices also increased slightly on continued supply limitations from Oceania due to high demand for flock rebuilding,” the report said.

It said the FAO Sugar Price Index averaged 119.1 points in October, down 1.8 per cent from September, marking the first decline after six consecutive monthly increases.

“International sugar quotations remained, however, more than 40 per cent above their levels in the same month of last year, mainly underpinned by concerns over reduced output prospects in Brazil.

“The recent monthly decline in international sugar prices was triggered by limited global import demand and prospects of large export supplies from India and Thailand.

“The weakening of the Brazilian Real against the US dollar also contributed to lowering world sugar prices in October.

“Higher ethanol prices in Brazil, however, prevented more substantial sugar price declines,” it said.

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