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The FAO Food Price Index steady, while sugar values down sharply

May 5th, 2018
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» The FAO Food Price Index* (FFPI) averaged 173.5 points in April 2018, nearly unchanged from March but up 2.7 percent from the corresponding period last year. While the prices of most cereals and dairy products continued to increase in April, sugar prices fell further. Vegetable oil and meat markets also remained under downward pressure.

» The FAO Cereal Price Index averaged 168.5 points in April, 1.7 percent (2.8 points) higher than in March and some 15.4 percent above its value in April 2017. The Index has followed an upward trend for the fourth consecutive month, with prices of wheat, coarse grains and rice all gaining momentum in recent months. In the case of wheat, weather-related risks, especially in the United States, and robust trade provided support to prices, while expectations of lower plantings in the United States, on the backdrop of drought-reduced production in Argentina, continued to push up international maize prices. Rice prices, on the other hand, increased, following a fresh round of public purchases by Indonesia and the launch of a state import tender by the Philippines.
The FAO Vegetable Oil Price Index averaged 154.6 points in April, entailing a 1.4 percent fall, month-on-month, which mainly reflects developments in the markets of palm, soy and sunflower oils. International price quotations of palm oil (the oil carrying the highest weight in the index) declined on slowing demand growth and prospective seasonal production gains in Southeast Asia. Meanwhile, soy oil values weakened further, reflecting persistently strong crushing levels among key producers. Conversely, sunflower oil prices firmed, fueled by expectations of tightening global export supplies.

» The FAO Dairy Price Index averaged 204.1 points in April, up 6.7 points (3.4 percent) from March, representing the third successive month of increase. With this latest rise, the index is over 11 percent above its level in the corresponding month last year. The upward price trend reflects robust import demand for all milk products, combined with market apprehensions regarding export availabilities in New Zealand following a bigger than anticipated decline in its milk output.

» The FAO Meat Price Index averaged 169 points in April, down 1.6 points (0.9 percent) from a slightly revised value for March. At this level, the index is almost equal to its value in April 2017. During the month, bovine and pigmeat prices decreased slightly, while those of ovine and poultry meat remained stable. Larger exports from the Americas underpinned the decrease in bovine meat prices, while slackened import demand caused pigmeat prices to ease.

» The FAO Sugar price index averaged nearly 176.6 points in April, down 8.9 points (4.8 percent) from March and as much as 24 percent lower than its April 2017 value. Continued declines in sugar price quotations since last December are largely a reflection of a supply glut in the sugar market, especially in view of record outputs in Thailand and in India, the world’s second largest sugar producing country. Additional downward pressure stemmed from a depreciation of the Brazilian currency (Real) with respect to the US Dollar, coupled with anticipated government support measures in India and Pakistan geared at boosting sugar exports.

* Unlike for other commodity groups, most prices utilized in the calculation of the FAO Meat Price Index are not available when the FAO Food Price Index is computed and published; therefore, the value of the Meat Price Index for the most recent months is derived from a mixture of projected and observed prices. This can, at times, require significant revisions in the final value of the FAO Meat Price Index which could in turn influence the value of the FAO Food Price Index.

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Wheat Is The Most Political Commodity In The World

April 14th, 2018
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Wheat is an essential ingredient in food that feeds the world. The price of wheat, like all agricultural commodities, depends on weather conditions in primary growing regions each year.

In 2008, the price of wheat rose to its all-time peak price at $13.345 per bushel as drought conditions limited supplies and caused the price to explode to the upside. At the beginning of 2000, the price of the grain was trading at $2.49 per bushel. While weather caused the rally to dizzying heights in 2008, the price of wheat has been making higher lows over the past eighteen years because of demographic factors. Global population has increased from 6 billion at the turn of the century to 7.465 billion, which means that there are 1.465 billion more people requiring food in the world these days.

While all commodities are finite resources, food is a daily essential. The rate of population growth means that each day, more people with more money compete for commodities. When it comes to wheat, history tells us that it is one, if not the most, political commodity as bread is a daily essential for people all over the globe.

A long political history for the primary ingredient in bread

Nothing can ignite civil disobedience and political upheaval like hungry people. Governments are highly sensitive to food availability because hunger has a long history of unseating those in charge. The French Revolution began as bread shortages caused royalty to literally lose their heads. “Let them eat cake” is a famous quote attributed to the Queen of France Marie-Antoinette. As the story goes, it was her response after being told that her starving peasant subjects had no bread. Her insensitivity to the hunger of her people led to a trip to the guillotine.

There are many examples of how bread shortages or rising prices have resulted in political change throughout history. The most recent example was the Arab Spring in 2010, which began as demonstrations in Tunisia and Egypt over rising bread prices and limited availability. Drought conditions in 2008 took the price of wheat, the primary ingredient in bread to the highest level in modern history at over $13 per bushel.

Source:  seekingalpha.com

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The FAO Food Price Index rises for the second consecutive month

April 7th, 2018
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» The FAO Food Price Index* (FFPI) averaged 172.8 points in March 2018, up 1.1 percent (1.8 points) from February, marking the second month of consecutive increase. At this level, the FFPI stood at 0.7 percent above its value of the corresponding month last year. As in February, the month-on-month increase in March was driven primarily by stronger international prices of cereals and dairy; whereas the prices of sugar and vegetable oils fell further and those of meat rose slightly.

» The FAO Cereal Price Index averaged 165.6 points in March, 2.7 percent (4.3 points) higher than in February and as much as 12.1 percent above its value in March 2017. The Index has been climbing continuously in recent months, reflecting firmer international prices of nearly all major cereals.  In recent weeks, weather concerns, in particular prolonged dryness in the United States and cold wet conditions in parts of Europe, lifted wheat price quotations. However, the increase in maize prices proved even more pronounced, supported by deteriorating crop prospects, especially in Argentina, as well as continued robust world demand. Asian purchases kept international rice prices also generally firm.

» The FAO Vegetable Oil Price Index averaged 156.8 points in March, falling marginally from February’s multi-month low. Modest price drops for soy, rape and sunflower oils were largely offset by higher prices of palm oil – the most widely traded vegetable oil in the world. Despite expectations of seasonal production gains, palm oil prices firmed in March on the back of robust international demand and consequent inventory drawdowns in Malaysia and Indonesia. The EU’s prospective resumption of imports of palm oil-based biodiesel from Indonesia and renewed strength in mineral oil prices also lent support to palm oil values.

» The FAO Dairy Price Index averaged 197.4 points in March, up 6.2 points (3.3 percent) from February and slightly above its level in the corresponding period last year. During the month, international price quotations for butter, Whole Milk Powder (WMP) and cheese rose, while those of SMP declined, reversing the gains recorded in the two preceding months. Lower than anticipated milk production in New Zealand and continued strong global import demand led to higher butter, cheese and WMP prices, while continued pressure from global stocks and higher production pushed down SMP prices.

» The FAO Meat Price Index averaged 169.8 points in March, almost unchanged from February. At this level, the index is 3 percent above the corresponding month last year but still almost 20 percent below the peak reached in August 2014. Across the various meat categories that constitute the index, price quotations for ovine meat increased, pig meat gained slightly, poultry meat remained stable, while those for bovine meat eased. Strong import demand, especially by China, strengthened ovine meat prices. Somewhat tight supplies in Europe underpinned a small increase in pigmeat prices, while subdued demand and expectations for supplies from New Zealand to increase in the coming months weighed on bovine meat values.

» The FAO Sugar Price Index averaged nearly 186 points in March, down 6.5 points (3.4 percent) from February and as much as 27.5 percent below its level the same month last year. Sugar prices continued to fall on account of large export availabilities. A weaker Brazilian Real and relaxed export rules from India, allowing millers to sell overseas until end of the current season, were seen as factors boosting sugar shipments from both countries and resulting in more subdued international price quotations.

* Unlike for other commodity groups, most prices utilized in the calculation of the FAO Meat Price Index are not available when the FAO Food Price Index is computed and published; therefore, the value of the Meat Price Index for the most recent months is derived from a mixture of projected and observed prices. This can, at times, require significant revisions in the final value of the FAO Meat Price Index which could in turn influence the value of the FAO Food Price Index.

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The FAO Food Price Index up slightly in February

March 10th, 2018
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» The FAO Food Price Index* (FFPI) averaged 170.8 points in February 2018, 1.1 percent (1.8 points) higher than in January but 2.7 percent below its value in the corresponding period last year. Higher international prices of dairy and cereals contributed to the month-on-month increase in the value of the FFPI, whereas the prices of sugar and vegetable oils fell while those for meat remained steady.

» The FAO Cereal Price Index averaged 160.8 points in February, up 2.5 percent (4 points) from January and 6.8 percent from February 2017. The increase in February marked the second consecutive month of notably strong month-on-month rise in the value of the Index after a relatively stable period from August to December of last year. Grain prices were generally firmer in February, underpinned by a brisk trade activity and concerns over unfavourable weather adversely affecting the US winter wheat and Argentina’s maize growing regions. International rice prices strengthened as well, although gains were capped by subsiding global demand for Indica supplies.

» The FAO Vegetable Oil Price Index averaged 158 points in February, down 3.1 percent (5.1 points) from January, marking a 19-month low. Prices of most vegetable oils weakened amid prospects of a growing global production surplus in 2017/18. Palm oil price quotations dropped the most, underpinned by slower-than-expected export activities and rising inventories in Malaysia and Indonesia. In the meantime, the outlook of record soy crushings in the US weighed on international soybean quotations, while sluggish demand (primarily from the biodiesel sector) pressured rapeseed prices.

» The FAO Dairy Price Index averaged 191.1 points in February, up 11.2 points (6.2 percent) from January but still slightly below the corresponding period last year. International price quotations across all four categories of milk products that constitute the index rose, supported by strong import demand amidst lower than expected milk output in New Zealand. Butter price quotations increased by nearly 6 percent after declining for four consecutive months since reaching its recent peak in September 2017. Price quotations for Cheese and Whole Milk Powder (WMP) also rose, underpinned by strong demand in Europe and Asia, while firm global demand pushed up Skim Milk Powder (SMP) values.

» The FAO Meat Price Index averaged 169 points in February, unchanged from its slightly revised value for January 2018 and almost 5 percent higher than at the same point last year. An increase in price quotations for bovine meat was offset by decreases in poultry and pig meat quotations, while those of ovine meat remained almost unchanged. Limited export availabilities from New Zealand caused bovine meat prices to strengthen for the second month in a row. International price quotations for poultry meat declined for the fourth consecutive month, largely on account of abundant export availabilities in major producing regions. Limited world import demand pressured the pig meat price index, which continued to fall since September 2017.

» The FAO Sugar Price Index averaged 193 points in February, down 3.4 percent (7 points) from January and hitting its lowest level in two years. International sugar prices remained under downward pressure, as production by major producers, such as Thailand and India, continued to expand.  Sugar markets also remained depressed on expectation of a sharp rise in the EU production in 2017/18, boosted by higher beet yields and last year’s removal of output quotas, which gave rise to larger plantings

* Unlike for other commodity groups, most prices utilized in the calculation of the FAO Meat Price Index are not available when the FAO Food Price Index is computed and published; therefore, the value of the Meat Price Index for the most recent months is derived from a mixture of projected and observed prices. This can, at times, require significant revisions in the final value of the FAO Meat Price Index which could in turn influence the value of the FAO Food Price Index.

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The FAO Food Price Index remaining steady

February 24th, 2018
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» The FAO Food Price Index* (FFPI) averaged 169.5 points in January 2018, nearly unchanged from December 2017 but almost 3 percent below the corresponding period last year. While firmer prices were registered for cereals and vegetable oils in January, dairy and sugar values were generally weaker and meat quotations remained steady.

» The FAO Cereal Price Index averaged 156.2 points in January, up almost 2.5 percent (4 points) from December and 6.3 percent from January 2017. Despite large supplies, wheat and maize prices received some support from a weaker US dollar as well as concerns over weather.  International rice values continued to firm up in January, sustained mainly by renewed Asian demand.

» The FAO Vegetable Oil Price Index averaged 163.1 points in January, virtually unchanged from December, as moderate rises in palm oil values were outweighed by weakening prices for other oils, notably sunflower and rapeseed oils. International palm oil quotations strengthened as global import demand picked up just when seasonal production declines were looming in Southeast Asia. By contrast, rapeseed oil prices were pressured by both excess supplies in the EU and larger than expected availabilities in North America and Australia, while those of sunflower oil were affected by sluggish global import demand.

» The FAO Dairy Price Index averaged 179.9 points in January, down 2.4 percent (4.5 points) from December 2017. Although this decline pushed the index further down for the fourth consecutive month, it is still 41 percent higher than its trough reached in April 2016. During the month, international price quotations for butter and cheese declined, while those of milk powders increased. Abundant milk supplies in the northern hemisphere and Australia represented a factor that heavily influenced global dairy prices, including the declines in butter and cheese prices. However, the possibility for seasonal milk production in New Zealand to be lower than expected lent support to Whole Milk Powder (WMP) prices. Skim Milk Powder (SMP) values also increased, mostly on account of strong import demand.

» The FAO Meat Price Index averaged 170.6 points in January, almost unchanged from its slightly revised value for December 2017. At this level, the index is 7.4 percent higher than its January 2017 value and 19.5 percent below its all-time high reached in August 2014. International price quotations for poultry and pigmeat continued to slide due to higher export availabilities amid weak import demand. Prices of bovine meat were up marginally, reflecting lower quantities offered for sale from Oceania, while those of ovine meat rose supported by strong international demand, especially from Asia and the Middle East.

» The FAO Sugar Price Index averaged almost 201 points in January, down 1.6 percent (3.2 points) from December and as much as 30.4 percent below the corresponding month last year. International sugar quotations remained under downward pressure mostly because of strong production outcomes in major producing countries and, hence, ample export availabilities.

* Unlike for other commodity groups, most prices utilized in the calculation of the FAO Meat Price Index are not available when the FAO Food Price Index is computed and published; therefore, the value of the Meat Price Index for the most recent months is derived from a mixture of projected and observed prices. This can, at times, require significant revisions in the final value of the FAO Meat Price Index which could in turn influence the value of the FAO Food Price Index.

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The FAO Food Price Index rebounded in 2017 despite a decline in December

January 13th, 2018
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» The FAO Food Price Index* (FFPI) averaged 169.8 points in December 2017, down 5.8 points (3.3 percent) from November with the steepest declines registered in the prices of dairy, vegetable oils and sugar while those of cereals and meat also fell but only slightly. For the whole of 2017, the FFPI averaged 174.6 points, up 8.2 percent from 2016 and representing the highest annual average since 2014 although still 24 percent below the 2011 high of almost 230 points. While sugar values plummeted in 2017, dairy and meat prices registered sharp year-on-year increases and those of cereals and oils rose too, albeit more modestly.

» The FAO Cereal Price Index averaged 152.7 points in December, down marginally from November but still up 7.4 percent from December 2016. Ample supplies and slower sales contributed to weaker wheat prices. However, international maize prices firmed slightly, mostly reflecting weather concerns in Argentina, while those of rice also inched up further, amid continued firm demand and currency appreciations in some leading exporting countries. Over the year, the FAO Cereal Price Index averaged 151.6 points in 2017, up 3.2 percent from 2016 but still some 37 percent below its peak reached in 2011.

» The FAO Vegetable Oil Price Index averaged 162.6 points in December, down 9.6 points (5.6 percent) from November, marking a 5-month low. The drop mainly reflects lower quotations for palm, rapeseed and soybean oils. International palm oil prices tumbled, as stocks in Malaysia and Indonesia swelled to two-year highs on the back of relatively strong production and weak export demand. As to rape oil, upward revisions of crops in Canada and Australia weighed on prices, whereas soy oil quotations were pressured by rival palm oil. For the year as a whole, the FAO Vegetable Oil Price Index averaged nearly 169 points, up 3 percent from 2016 but still well below the peaks recorded in 2008 and 2011.

» The FAO Meat Price Index* averaged 171.6 points in December, marginally below its slightly revised value of November. International price quotations for bovine meat fell, pressured by increased offerings in both domestic and international markets. However, pig, poultry and ovine meat quotations changed only little, reflecting an overall balanced supply and demand situation. For the year, the FAO Meat Price Index averaged 170 points in 2017, up 9 percent from 2016 but 4.7 percent below the average for the preceding five years (2012-2016). In 2017, ovine meat prices recorded the largest increase, followed by those of pigmeat, poultry and bovine meat.

» The FAO Dairy Price Index averaged 184.4 points in December, down 19.8 points (9.7 percent) from November, marking the third successive month of decline. High export supplies in the face of subdued demand weighed on the international prices of all the four milk products that constitute the Index. Uncertainty over the intervention stocks in the EU continued to put downward pressure on international price quotations for skim milk powder (SMP). Overall, the FAO Dairy Price Index averaged 202.2 points in 2017, up 31.5 percent from 2016, with the largest increase recorded for butter followed by whole milk powder (WMP) and cheese, whereas SMP prices remained stable.

» The FAO Sugar Price Index averaged 204 points in December, down 8.6 points (4.1 percent) from November. After a relatively strong rebound in November, international sugar quotations fell back in December due to seasonal pressure, subdued demand and expectations of a large surplus in 2018.  Over the year, the FAO Sugar Price Index averaged 227.3 points in 2017, down 11.2 percent from 2016 and as much as 38 percent from its 2011 peak of 369 points. The fall in sugar prices in 2017 largely reflected a bumper harvest in Brazil, the world’s largest producer, along with strong production recoveries in India and Thailand.

* Unlike for other commodity groups, most prices utilized in the calculation of the FAO Meat Price Index are not available when the FAO Food Price Index is computed and published; therefore, the value of the Meat Price Index for the most recent months is derived from a mixture of projected and observed prices. This can, at times, require significant revisions in the final value of the FAO Meat Price Index which could in turn influence the value of the FAO Food Price Index.

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FAO Food Price Index down marginally in November

December 16th, 2017
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» The FAO Food Price Index* (FFPI) averaged 175.8 points in November 2017, down fractionally (0.5 percent) from October but still almost 4 points (2.3 percent) above the corresponding period last year. A sharp rise in sugar and vegetable oil quotations was largely offset by a fall in dairy values while international prices of cereals and meat products remained relatively muted.

» The FAO Cereal Price Index averaged 153.1 points in November, nearly unchanged from October but up almost 12 points (8.3 percent) from November 2016. The Index has remained largely steady since August, generally reflecting an overall balanced supply and demand situation especially with regard to wheat and maize markets. In November, international rice prices rose by 1.1 percent, amid stronger buying interest and currency movements.

» The FAO Vegetable Oil Price Index averaged 172.2 points in November, up 2.1 points (or 1.2 percent) from October and marking a 9-month high. The rise mainly reflects higher quotations for soy, rapeseed and sunflower oils. Soy oil quotations increased, as weather uncertainties continued to affect crops in South America and also because below-average oil content was reported for the United States’ recently harvested crop. International prices of sunflower and rapeseed oils rose, underpinned by, respectively, subdued availabilities and firm demand. Lower palm oil values, mainly following a hike in Indian import duties and higher than anticipated closing stock levels in Malaysia, prevented the index from rising further. Firm mineral oil values also lent support to vegetable oils prices.

» The FAO Dairy Price Index averaged 204.2 points in November, down 10.6 points (4.9 percent) from October, representing the second consecutive month of a sharp decline. However, the index is still 9.6 percent higher than November 2016. International price quotations for butter, cheese and whole milk powder (WMP) all fell, as rising milk output in all the major producing countries contributed to reducing concerns about the availability of supplies. Skim milk powder (SMP) prices slid to a near 18-month low, on continued uncertainty over the intervention stocks held by the European Union.

» The FAO Meat Price Index* averaged 173.2 points in November, almost unchanged from its slightly revised October value. International price quotations for pigmeat weakened for the third consecutive month, on account of slow import demand and large export availabilities. Similarly, ovine meat quotations slid downward, for the second successive month, largely due to continued increase in meat supplies in Oceania. By contrast, bovine meat prices rose for the third month in a row, supported by limited spot supplies from Oceania. Prices in poultry meat markets remained stable.

» The FAO Sugar Price Index averaged 212.7 points in November, up 9.2 points (4.5 percent) from October but still as much as 26 percent below the corresponding month last year. International sugar prices rose in November, mostly supported by a drop in exports from Brazil and concerns over firmer oil prices encouraging greater switch of cane crush to produce ethanol than sugar.

* Unlike for other commodity groups, most prices utilized in the calculation of the FAO Meat Price Index are not available when the FAO Food Price Index is computed and published; therefore, the value of the Meat Price Index for the most recent months is derived from a mixture of projected and observed prices. This can, at times, require significant revisions in the final value of the FAO Meat Price Index which could in turn influence the value of the FAO Food Price Index.

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FAO Food Price Index edges down in October

November 11th, 2017
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» The FAO Food Price Index* (FFPI) averaged 176.4 points in October 2017, down 2.2 points (1.3 percent) from September. Although at this level the FFPI was up 4 points (2.5 percent) from its value in October 2016, it remained 27 percent below its all-time high (in nominal terms) of 240 points registered in February 2011. With the exception of cereals, all the other indices used in the calculation of the FFPI fell in October.

» The FAO Cereal Price Index averaged 152.8 points in October, up a notch from September and 10.5 points (7.4 percent) higher than the same month last year. Among the major cereals, wheat quotations were generally lower, pressured by large exportable supplies from the Back Region and increased competition among exporters. Maize prices increased slightly in the US, although those from South America were weighed down by large supplies. Rice prices strengthened in October, amid seasonally tight Japonica and fragrant supplies, with additional support for Japonica prices stemming from a series of tenders in the Far East.

» The FAO Vegetable Oil Price Index averaged 170 points in October, down 1.8 points (or 1.1 percent) compared to the previous month and close to the level recorded one year ago. The index’ retreat was primarily driven by palm and soy oils. Palm oil values weakened on higher than anticipated inventory levels in Malaysia and the expectation of production gains in Southeast Asia, while soyoil prices eased on good soybean harvest progress in the United States and forecasts of ample global availabilities in 2017/18. Lower sunflower oil quotations, facilitated by large export availabilities in the Black Sea region, also weighed on the index.

» The FAO Dairy Price Index averaged 214.8 points in October, down 9.4 points (4.2 percent) from September and marking the first drop since May 2017. At that level, the index was 32 points (17.5 percent) above its value in October 2016, but 22 percent below its peak reached in February 2014. International quotations for butter, skim milk powder (SMP) and whole milk powder (WMP) eased in October, while those of cheese remained more stable. Butter and WMP prices fell as importers held back on purchases, awaiting arrival of new supplies from Oceania. Low demand and ample intervention stocks in the EU hastened the decline of SMP prices. A balanced cheese market contributed to more stable cheese quotations.

» The FAO Meat Price Index* averaged 172.7 points in October, down 1.6 points (0.9 percent) from September and continuing a trend of moderate declines that began in July this year. International prices of pig and ovine meat declined in October, while those of bovine meat increased and of poultry were stable. Intense competition among exporters and sluggish import demand have been behind the declines in pigmeat prices observed in recent months. However, bovine meat prices rose for the third consecutive month due to limited spot offers from Oceania. A seasonal increase in ovine meat supplies in Oceania pushed down ovine prices, while poultry meat markets remained well balanced.

» The FAO Sugar Price Index averaged nearly 203 points in October, down 1.4 points (0.7 percent) from September and as much as 112 points, or 36 percent, below the corresponding month last year. Sugar prices fell in October as the potential for higher supplies in 2017/18 was further reinforced with prospects for a larger beet crop in the EU and bigger output in the Russian Federation. Weaker Brazilian Real, increasing the potential for larger export sales from Brazil, also weighed on international prices, especially in view of a significant slowdown in purchases by China because of higher import tariffs.

* Unlike for other commodity groups, most prices utilized in the calculation of the FAO Meat Price Index are not available when the FAO Food Price Index is computed and published; therefore, the value of the Meat Price Index for the most recent months is derived from a mixture of projected and observed prices. This can, at times, require significant revisions in the final value of the FAO Meat Price Index which could in turn influence the value of the FAO Food Price Index.

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FAO Food Price Index mildly up in September

October 7th, 2017
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» The FAO Food Price Index* (FFPI) averaged 178.4 points in September 2017, up 1.4 points (0.8 percent) from August and 7.4 points (4.3 percent) above September 2016. Firmer prices in the vegetable oil and dairy sectors were behind the small month-on-month rise in the value of the FFPI.

» The FAO Cereal Price Index averaged 152.2 points in September, down 1.6 points (1.0 percent) from August. While the Index declined for the second consecutive month, it remained 8 percent above the corresponding month last year. Maize prices fell in September, reacting to ample supplies in South America and harvest pressure in the northern hemisphere. Wheat values were also weaker, with continued upgrading of this year’s harvest in the Russian Federation a major factor. By contrast, seasonally tight availabilities of fragrant rice and firm demand for higher quality Indica supplies kept international rice prices firm over the month.

» The FAO Vegetable Oil Price Index averaged 171.9 points in September, compared to 164.4 in August – rising for the second consecutive month and marking a 7-month high. The gain was primarily driven by palm oil, prices of which strengthened amid lower than anticipated production in Southeast Asia and firm import demand fuelled by low inventory levels in main importing countries. International soy oil prices also rose, mainly reflecting concerns about a slow start in plantings in South America, though the price increases were capped by larger than expected harvest estimates in the United States. Continued firmness in rapeseed and sunflower oil values also contributed to the rise in the index.

» The FAO Dairy Price Index averaged 224.2 points in September, up 4.5 points (2.1 percent) from the previous month. At this level, the index was 27.4 percent higher than the corresponding period last year, but still 18.6 percent below its peak reached in February 2014. The increase in September reflects continued supply constraints in Australia, New Zealand and the European Union, with growth in the United States remaining timid. Butter and cheese remain the dairy products in highest demand, especially in Asia. Meanwhile, international prices of Skimmed Milk Powder (SMP) and Whole Milk Powder (WMP) fell due to limited buying interests.

» The FAO Meat Price Index* averaged 173.2 points in September, unchanged from August but up 9.5 points (5.8 percent) compared to the same period last year. In September, a rise in the international prices of ovine meat countered a decline in pig meat quotations, while those of bovine and poultry meat remained largely unchanged. In the case of ovine meat, prices rose, buoyed by strong import demand, especially from the Middle East and South East Asia, coupled with continued overall supply constraints in Oceania. By contrast, pigmeat prices fell slightly, responding to improved supplies from Brazil. Poultry and bovine meat markets remained well supplied, keeping prices stable.

» The FAO Sugar Price Index averaged 204.2 points in September, nearly unchanged from August but as much as 101 points (33 percent) below the same period last year.  The rapid decline in sugar quotations since the beginning of this year reflects a continuing oversupply situation prevailing in world markets, in parallel with the slow-down in demand.

* Unlike for other commodity groups, most prices utilized in the calculation of the FAO Meat Price Index are not available when the FAO Food Price Index is computed and published; therefore, the value of the Meat Price Index for the most recent months is derived from a mixture of projected and observed prices. This can, at times, require significant revisions in the final value of the FAO Meat Price Index which could in turn influence the value of the FAO Food Price Index.

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Uncommon Cacao vs. global commodity markets

September 23rd, 2017
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A new report from the farmer financier highlights imbalances that disproportionately hurt farmers and create disincentives among manufacturers and retailers to push for change

To understand the impact that volatile commodity markets have on the “little guy,” just look at the Ivory Coast. The West African country is the world’s largest producer of cacao?—?the fruit that chocolate is made from. To help farmers stabilize income, the government sets a minimum price for purchasers: last year it was $1.88 a kilogram of cacao beans. But the markets had a different idea.

Higher-than-expected yields drove down futures prices for cleaned, roasted cacao beans on the London and New York markets. In turn, the Ivory Coast’s government slashed the guaranteed price to farmers by 36%?—?a decision that affects cacao farmers worldwide because the price is set every year in West Africa where 60% of the world’s cocoa is produced.

Here’s where Uncommon Cacao comes in. The Berkeley, Calif., social enterprise provides logistics and financial services to smallholder cacao farmers, connecting them with premium chocolate makers. It started in Belize in 2010 with a vision of making cacao trading more equitable for local farmers and has grown to a network of 2,600 farmers in five Latin American and Caribbean countries. Now it is looking to effect a systems change across the entire cocoa market through something the market currently lacks: farmer pricing transparency.

In its latest transparency report, Uncommon Cacao details the prices received by farmers in its network, where producers earned $1.30 a kilogram above the 2016 West Africa FarmGate price and 30 cents a kilogram above the average commodity price.

The report exposes several other issues in the cocoa value chain that affect farmers. One is the importance of cacao processing to farmer income. In Haiti, for instance, Uncommon Cacao partners with PISA, a cacao processor and farmer network that works with half of all farmers (and 70% of women farmers) in Uncommon Cacao’s network. Last year, the farmers received slightly below the West African FarmGate price for their crops?—?a legacy of Haiti’s notoriously opaque cacao market, where large export companies historically have bought “dried, unfermented, low quality cacao from smallholder farmers at prices below the commodity mark,” the report says.

Since PISA opened its own central processing plant, producers have seen earnings almost quadruple. What’s more, the report notes, they are “incentivized to protect their trees from the environmentally degrading charcoal market.” (An article by agricultural data company Gro Intelligence says that farming accounts for only 6.6% of the cocoa value chain; processing accounts for an additional 7.6% of the value.)

The report raises another issue that affects farmer income: the unreliability of product certification. Because existing certifications don’t verify quality or flavor of the beans, the report says, it leaves farmers at the mercy of commodity pricing because all cocoa beans are treated the same.

Finally, Uncommon Cacao highlights imbalances that disproportionately hurt farmers and create disincentives among manufacturers and retailers to push for change. “Our entire supply chain is only 10% or less of the price of a chocolate bar,” the report states. (Gro Intelligence’s data reveals that almost 80% of cocoa’s market value is in manufacturing and retail.) “We need consumers to pay more and retailers to get on board with margin transparency.”

Source:  news.impactalpha.com

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