- Higher sugar, dairy, and vegetable oil prices drive the overall increase
ROME – The benchmark for global food commodity prices rose in February, propelled by increases in sugar, dairy, and vegetable oil prices, according to the new Food and Agriculture Organization of the United Nations (FAO) report released today.
The FAO Food Price Index, which tracks monthly changes in the international prices of a set of globally traded food commodities, averaged 127.1 points in February, up 1.6 percent from the previous month and 8.2 percent higher than its February 2024 level.
The surge was largely driven by the FAO Sugar Price Index, which rose by 6.6 percent from January after three consecutive months of decline, reaching 118.5 points in February. The increase was fuelled by concerns over likely tighter global supplies for the 2024/25 season, particularly due to declining production prospects in India and adverse weather conditions affecting crops in Brazil.
The FAO Dairy Price Index increased by 4.0 percent from January, averaging 148.7 points. The rise was the result of higher prices across all major dairy products, including cheese and whole milk powder, as strong import demand exceeded production in key exporting regions.
The FAO Vegetable Oil Price Index averaged 156.0 points in February, up 2.0 percent from January and as much as 29.1 percent higher than a year earlier. The increase was largely the result of higher prices for palm, soy, and sunflower oils, driven by seasonal supply constraints in Southeast Asia and robust demand from the biodiesel sector.
The FAO Cereal Price Index edged up 0.7 percent in February, averaging 112.6 points. Wheat prices increased due to tighter supplies in the Russian Federation and concerns over crop conditions in eastern Europe and North America, though the overall index remained slightly below its February 2024 level. World maize prices continued to rise, underpinned by tightening supplies in Brazil and strong US export demand. By contrast, world rice prices fell by 6.8 percent in February due to ample exportable supplies and weak import demand.
The FAO Meat Price Index held steady in February, averaging 118.0 points, down marginally by 0.1 percent from January. While international poultry and pig meat prices eased due to abundant supplies, ovine and bovine meat prices remained firm, supported by strong global import demand.
Early forecast predicts modest increase in 2025 global wheat production
FAO has also released its latest Cereal Supply and Demand Brief, forecasting global wheat production in 2025 at 796 million tonnes, marking a modest increase of nearly 1 percent from the previous year. This forecast is underpinned by anticipated production gains in the European Union, particularly in France and Germany, where soft wheat sowings are expected to increase. However, challenges such as dry conditions in Eastern Europe and excessive rainfall in Western regions could affect yield improvements. In the United States of America, wheat acreage is expected to expand, although yields may decline slightly due to drought conditions impacting winter crops.
Rice production is forecast to hit a record high of 543 million tonnes (in milled equivalent) in 2024/25, driven by positive crop prospects in India and favourable growing conditions in Cambodia and Myanmar.
FAO has raised its estimate for global cereal production in 2024 to 2 842 million tonnes, a slight uptick from the 2023 level.
Global cereal utilization for the 2024/25 marketing year is forecast at 2,867 million tonnes, a 1.0 percent increase from the previous year, driven by an expected record rice consumption. Wheat utilization is anticipated to remain stable, as a slight decrease in food consumption is balanced by an increase in industrial use, particularly in China.
FAO predicts a 1.9-percent decline in global cereal stocks, with ending stocks for 2025 forecast at 869.3 million tonnes, with higher stocks in the Russian Federation and Ukraine expected to be offset by reductions elsewhere. The global stocks-to-use ratio is expected to fall to 29.9 percent, still indicating a comfortable supply. Additionally, FAO has revised its forecast for global cereal trade to 484.2 million tonnes, down 5.6 percent from the previous season due to changing export dynamics.
2025 Crop outlook varies across regions
FAO has also released today a new edition of its Crop Prospects and Food Situation report. Looking ahead to 2025, in Africa, prolonged dry weather conditions in North Africa are dampening cereal production prospects, while favourable rainfall in Southern Africa is expected to support a rebound in crop yields following significant declines in 2024.
In Asia, the outlook is mixed. Far East Asia is expected to see continued growth in wheat production for 2025, driven by large plantings and favourable weather conditions. By contrast, Near East Asia is grappling with low rainfall since late 2024, which has affected yield potentials and could lead to wheat harvests falling below the five-year averages.
Meanwhile, in Latin America and the Caribbean, mixed weather conditions are impacting maize production in South America, with the risk of stunt disease outbreaks posing an additional threat in Argentina. Despite these challenges, aggregate production is still anticipated to remain above average levels, largely due to good output prospects in Brazil. In Central America and the Caribbean, ongoing dry conditions have reduced cereal plantings in Mexico, while favourable weather in other parts is expected to boost yields.
The report also highlights that 45 countries, including 33 in Africa, nice in Asia, two in Latin America and the Caribbean, and one in Europe, are currently in need of external assistance for food. According to the report, persisting conflicts and civil insecurity remain the primary drivers of severe hunger, with populations in the Gaza Strip (Palestine) and the Sudan facing IPC Phase 5 levels of acute food insecurity.
The Agricultural Market Information System (AMIS), hosted by FAO, also released its monthly Market Monitor report today. Along with the usual market analysis sections, the report features an article presenting the first global wheat production forecasts for 2025.
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