F.A.O. Food Price Index finishes flat in January

by Eric Schroeder
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ROME — The Food and Agriculture Organization of the United Nations said the F.A.O. Food Price Index was flat in January, finishing at 209.8 and ending three straight months of declines.  Increases in oils and fats prices offset lower cereals and sugar prices, while dairy and meat values remained mostly unchanged.

The F.A.O. Cereal Price Index was at 247.2 points in January, down 1.1%, or 2.9 points, from 250.1 points in December.

“The values of the monthly index have been falling since October, mostly on improved crop conditions,” the F.A.O. said. “The January decline reflects a slide in grain quotations as rice changed little. Large exports of feed wheat have weighed negatively on maize quotations in spite of tight availabilities. As for rice, a slide in japonica quotations was compensated by rises in aromatic prices, with Indica rice values marginally up.”

The Meat Price Index averaged 175.9 points, down 0.9 points from 176.8 points in December, as prices of all meat categories remained mostly flat. The F.A.O. did note a slight weakening in poultry and pig meat prices.

“As a whole, the meat industry continues to be challenged by high feed prices and limited growth in consumption,” the F.A.O. said.

The Dairy Price Index averaged 198.2 points, up 1.4 points from December. The F.A.O. noted prices have stabilized in recent months after having risen from mid-year lows in 2012. The organization said there has been some reduction in the price of skimmed milk powder from the United States.

The Sugar Price Index averaged 267.8 points in January, down from 274 points in December.

“Prices have declined for the third consecutive month, driven by the expectation of a large global production surplus and hefty export availabilities in the 2012-13 marketing season, notably in Brazil and Thailand,” the F.A.O. said. “Sugar production is also expected to be large in the traditional importing countries, which so far has limited their need to source from international markets.”

The Food Price Index consists of the average of five commodity group price indices weighted with the average export shares of each of the groups for 2002-04. In total, 55 commodity quotations considered by F.A.O. commodity specialists as representing the international prices of the food commodities are included in the overall index.
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