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Global food prices continue to rise

08 February 20222 min reading

The gauge for world food prices went up in January, largely catalysed by supply-side constraints for vegetable oils, the Food and Agriculture Organization of the United Nations (FAO) reported.

The FAO Food Price Index averaged 135.7 points in January, 1.1 percent higher than in December. The increase has been driven by a significant jump in vegetable oil and dairy prices. The Index tracks monthly changes in the international prices of commonly-traded food commodities.

The FAO Vegetable Oils Price Index led the rebound in January, increasing by 4.2 percent month-on-month and reversing its December decline to reach an all-time high. Quotations for all major oils rose, also supported by rising crude oil prices. Referring to the latest vegetable oils price increase, Boubaker Ben-Belhassen, Director of FAO’s Markets and Trade Division said: “Reduced export availabilities on top of other supply-side constraints, especially labour shortages and unfavourable weather,  largely pushed vegetable oil prices up to an all-time high. There is a concern the impacts of these constraints will not ease quickly.”

The FAO Dairy Price Index increased by 2.4 percent, its fifth consecutive monthly rise, with the steepest increases registered for skim milk powder and butter.  Reduced export availabilities from Western Europe and below-average expectations for milk production in Oceania in the months ahead contributed to the tightening in global dairy markets, as did processing and transportation delays linked to COVID-19-related labour shortages.

The FAO Cereal Price Index in January increased marginally, by 0.1 percent, from December. Maize export prices rose by 3.8 percent during the month, spurred by worries about persistent drought conditions in South America, while world wheat prices declined by 3.1 percent on the back of large harvests in Australia and Argentina. Lower harvests and steady purchases by Asian buyers led to a 3.1 percent monthly increase in international rice prices.

The FAO Meat Price Index increased slightly in January, with world bovine meat prices reaching a new peak as global import demand exceeded export supplies, while ovine and poultry meat prices softened as exportable supplies outstripped import demand. Pig meat quotations rose slightly, in part due to rising input costs dampening global supply.


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