News FAO Food Index
Food index takes first step towards recovery
The FAO food price index, the indicator for global food prices, has mainly fallen over the first months of 2020. Over the month of June, however, the index took a step up. This is the first increase in points this year.
The average number of points increased to 93,2, an increase of 2,4% compared to the previous month. It is also the first increase this year after the increasing pressure on the market due to the corona crisis. The price indices of vegetable oils, sugar and dairy products are responsible for the increase.
FAO has revised its indicators for the measurement and now uses the years 2014 to 2016 as the base period instead of 2002 to 2004. The organization believes the adjustment is necessary to ensure that the price index remains relevant.
Points Increasing Indexes
The sugar index averaged 75 points in June and is 7,2 points higher than in May. This increase is largely due to crude oil prices, which strongly support the sugar markets. The vegetable oil index averaged 86,6 points in June, 8,8 points higher than in May. The main factor in the increase is the higher palm oil value. It rose sharply in June as a result of recovering global import demand, thanks to the easing of the corona measures.
The dairy index rose by 3,8 points in June to an average of 98,2 points. The 4% increase was not enough to surpass the June 2019 level and the index is still 4,6 points below last year's level. Although the prices of dairy products rose in July, they are not yet able to reach pre-corona levels.
Meat and grain index not rising
The meat and grain index is the only one that has not seen an increase. Both indices are both down 0,6%. For the grain index, the number of points dropped to 96,9 points in June. Compared to the same month last year, a decrease of 1,9% is noted. The meat index fell to 95,2 points in June. Compared to the same month last year, the level is about 6% lower.
Meat production
FAO expects global meat production to fall by about 2% this year. It is estimated that approximately 2020 million tons of meat will be produced in 333, a decrease of 1,7% compared to 2019. Pork production plays the largest role in the total decrease, but the other meat sectors are also negatively affected by the corona virus. .
Global pork production is expected to fall by 8% due to African swine fever and the logistical barriers associated with the coronavirus crisis. The FAO estimates that the bulk of the decline will come from China (-20%), Vietnam (-15%) and the Philippines (-8%).
Chanti Oussoren
© DCA Market Intelligence. This market information is subject to copyright. It is not permitted to reproduce, distribute, disseminate or make the content available to third parties for compensation, in any form, without the express written permission of DCA Market Intelligence.