Global food prices drop for third-consecutive month on falling sugar, veg oil, meat and dairy costs

Global food commodity prices inched lower in November, marking the third consecutive month of decline driven by significant falls in sugar, meat, and vegetable oil prices, the UN Food and Agriculture Organization (FAO) announced on Dec. 5.

The FAO Food Price Index (FFPI), which tracks monthly price changes across a basket of internationally traded food commodities, averaged 125.1 points, down 1.2% from October. The index was 2.1% lower than its level in November of the prior year and remained 21.9% below its March 2022 peak, which followed Russia's full-scale invasion of Ukraine.

Sharp decline in sugar prices leads to a downturn

Sugar led the overall decline, with the FAO Sugar Price Index falling 5.9% from October and nearly 30% from the same period a year earlier.

The index reached its lowest level since December 2020. This drop was primarily driven by robust harvest projections in Brazil and India, coupled with favorable crop forecasts in Thailand, which prompted a strong global supply outlook.

Platts, part of S&P Global Energy, assessed March NY11 sugar futures at 14.89 cents/lb on Dec. 4, down 1.46% from Nov. 26. On the same day, Platts assessed hydrous ethanol ex-mill Ribeirao Preto converted into raw sugar equivalent at 16.55 cents/lb Dec. 4, marking a 166-cent/lb discount to the hydrous ethanol price expressed in raw sugar equivalent, including CBIOs.

The Credito de Descarbonizacao, or CBIO, is the equivalent of 1 metric ton of CO2 not released into the atmosphere. Biofuel producers and importers issue the instrument to ensure that Brazil attains its decarbonization targets.

Vegetable oils post notable falls

The Vegetable Oil Price Index fell 2.6%, reflecting a decrease in prices across palm, rapeseed, and sunflower oils.

Palm oil prices decreased amid increased output in Malaysia, resulting in a discount compared to rival oils.

This overall decline occurred despite soy oil prices inching higher, supported by strong demand from the biodiesel sector, particularly in Brazil.

Platts assessed FOB Dutch Mill rapeseed oil front-run at Eur1068/mt on Dec. 4, down Eur13/mt or 1.2% on the year.

Meat and dairy extend the downward trend

Dairy prices continued their downward trajectory, with the FAO Dairy Prices Index falling 3.1% on the month, marking its fifth consecutive month of declines.

The easing was attributed to rising milk production and abundant export supplies across key producing regions, leading to lower quotations for butter and whole milk powder.

The FAO Meat Price Index also eased, dropping 0.8 percentage points. This was driven by lower prices for pig and poultry meat, resulting from ample global exportable supplies and heightened competition.

Poultry markets, in particular, had increased competition as Brazil sought to regain market share following the lifting of trade bans related to highly pathogenic avian influenza by key importing countries. At the same time, international bovine meat quotations remained broadly stable.

The Platts USCM assessed price for US frozen chicken leg quarters FCA Savannah was $22/mt higher at $ 1,190/mt on Dec. 4, equivalent to a 54-cent/lb increase, while the assessment for jumbo boneless skinless breasts EXW US Southeast was at $1.17/lb, unchanged from the previous assessment.

Cereal prices buck the trend

In contrast to the broad decline across other commodities, the FAO Cereal Price Index was the sole major component to register a gain, rising 1.8% month-on-month.

This increase was primarily driven by higher international wheat prices, which rose 2.5%. Wheat markets were bolstered by potential Chinese demand for US supplies, continuing hostilities in the Black Sea region, and expectations of reduced plantings in Russia.

Meanwhile, international maize prices were also supported by firm demand for Brazilian exports and reports of weather disruptions affecting fieldwork in Argentina and Brazil.

By contrast, the FAO All Rice Price Index declined by 1.5% due to main-crop harvests in Northern Hemisphere exporting countries and subdued import demand.

Platts assessed Canada Western Red Spring Wheat 13.5% FOB Vancouver 30-45 days forward 64 cents higher day over day Dec. 4 on a firmer basis and weaker futures.