FAO: Global food prices hit lowest point in 4 years

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  freeimages.com/sumi

  Global food prices fell another 1 percent to the lowest in four and a half years.

  From WATTAgNet:
  Global food prices fell another 1 percent to the lowest in four and a half years, the U.N. Food and Agriculture Organization (FAO) reported.
  The FAO price index averaged 179.4 points in February, which is 1.8 points lower than the January reading.
  High global production, low crude oil prices and limited demand from major importers have helped keep food prices low.
  Key figures:
  The FAO Cereal Price Index averaged 171.7 points in February, down 5.6 points (3.2 percent) from January. Prices of wheat, coarse grains and rice were all lower, but the decline was most pronounced for wheat.
  The FAO Meat Price Index averaged 187.4 points in February, down 2.8 points (1.4 percent) from its revised January value. The reduction was caused by lower bovine and ovine meat quotations, while poultry meat prices were unchanged and those of pig meat  recovered after eight straight months of decline.
  The FAO Dairy Price Index averaged 181.8 points in February, up 8 points (4.6 percent) from its January value – representing its first gain since February last year.
  The FAO Vegetable Oil Price Index averaged 156.6 points in February, up slightly (0.4 percent) from January.
  The FAO Sugar Price Index averaged 207.1 points in February, down 10.6 points (4.9 percent) from January.

FAO: Food Price Index down 1.9 percent from December

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  freeimages.com

  The FAO Food Price Index continued to decline in January, averaging 182.7 point, down 1.9 percent from December.

  From WATTAgNet:
  The FAO Food Price Index continued to decline in January, averaging 182.7 point, down 1.9 percent from December.
  "The index has been on a downward path since April 2014. The January decline was partly influenced by robust inventories, continued strength in the US dollar and weak crude oil prices," the FAO said.
  The FAO Cereal Price Index averaged 177.4 points in January, down 3.6 percent from the previous month. International wheat prices fell by 7 percent from December, reflecting ample supply.
  The FAO Vegetable Oil Index also fell significantly to 156.0 points, down 2.9 percent from the previous month and is now at its lowest level since October 2009. The decline was driven largely by ample supplies of soy oil and lower crude oil prices.
  The FAO Meat Price Index declined 1.6 percent during the month to average 194.3 points. The decline was partly brought about by the U.S. dollar’s strength, notably against the euro, as well as by abundant global pig meat availability for export.
  The FAO Dairy Price Index was stable in January, averaging 173.8 points as rising butter prices offset a decline in prices – spurred in part by the weakening euro – for cheese and skimmed milk powders.
  The FAO Sugar Price Index averaged 217.7 points, also virtually unchanged from December.

FAO: Global food prices down in December

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  freeimages.com/alexbruda

  The Food and Agriculture Organization (FAO) said global food prices fell in December after three months of stability.

  From WATTAgNet:
  The Food and Agriculture Organization (FAO) said global food prices fell in December after three months of stability.
  The December Food Price Index averaged 188.6 points, a 1.7 percent drop from November. The decline was led by sugar and palm oil. For all of 2014, the Food Price Index averaged 202 points, down 3.7 percent from 2013, marking the third consecutive annual decline.
  The Cereal Price Index averaged 183.9 points in December, up 0.4 percent from November as wheat prices rose due to worries that Russia may restrict exports. But the increase was capped by the stronger US dollar. Rice prices fell amid abundant export supplies.
  The Vegetable Oil Price Index average declined by 2.4 percent to a five-year low of 161 points in December, due mainly to depressed demand for palm oil as a biodiesel feedstock.
  The Dairy Price Index declined by 2.3 percent to 174 points, its lowest level since late 2009, as slowing imports by China and Russia left abundant export supplies for international markets. Price declines were greatest for milk powders, butter and cheese.
  The Meat Price Index also declined in December, down 1.9 percent from the previous month, on a stronger U.S. dollar. 

FAO: Global food prices have stabilized

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  TheFAO, in its monthly food price index, said global food prices have stabilized after several volatile years.

  From WATTAgNet:
  The Food and Agriculture Organization (FAO), in its monthly food price index, said global food prices have stabilized after several volatile years. The food price index tracks the prices of major food commodities, such as vegetable oils, sugar, cereals, meat and dairy products on international markets.
  The FAO says the food price index has been stable for three consecutive months, with average prices 6.4 percent below those of November 2013.
  “The index appears to have bottomed out with higher probabilities for a rise in its value in coming months,” said FAO senior economist Abdolreza Abbassian.
  Vegetable oils and grains were up slightly in November. Sugar was down 3.2 percent since October. Dairy prices were down 3.4 percent from October. Meat prices are at a historically high level, but stable in November compared with the previous month. Cereal prices were up significantly for the first time since March, 2.6 percent higher than in October. Vegetable oil prices were down 17 percent from last year, but up slightly from October.

Study finds food prices rising

Continuing a decade-long increase, global food prices rose 2.7 percent in 2012, reaching levels not seen since the 1960s and 1970s but still well below the price spike of 1974. The price increases reverse a previous trend when real prices of food commodities declined at an average annual rate of 0.6 percent from 1960 to 1999, approaching historic lows, according to Worldwatch Institute's Vital Signs Online service.
Along with higher price levels, volatility has also increased dramatically in recent years. According to the United Nations Food and Agriculture Organization, the standard deviation -- or measurement of variation from the average -- for food prices between 1990 and 1999 was 7.7 index points, but it increased to 22.4 index points in the 2000-12 period.
Although food price volatility has increased in the last decade, it is not a new phenomenon. According to World Bank data, the standard deviation for food prices in 1960-99 was 11.9 index points higher than in 2000-12. Some price volatility is inherent in agricultural commodities markets, as they are strongly influenced by weather shocks. But the recent upward trend in food prices and volatility can be traced to additional factors including climate change, an increase in biofuels production, higher-than-normal imports, trade policies, low levels of stocks, rising energy and fertilizer prices, and increased trade within futures markets for food commodities.
International food price trends (measured in terms of consumer prices, not those paid to producers) varied by commodity in 2012. Due to the ubiquity of corn, wheat, and rice in global diets, changes in the price of cereal grains generally affect consumers more than fluctuations in other foods. Since food prices began increasing in the early 2000s, cereal prices have jumped more than 80 percent and exhibited significant volatility, according to the Food and Agriculture Organization. Continuing this trend, global cereal prices increased 12.3 percent in 2012. Unfavorable weather conditions -- including severe drought in the United States and Eastern Europe -- drove cereal prices up 18.2 percent between June and September, when they approached the all-time high observed in 2008. 
Various forces affecting global food supply and demand have influenced the level and volatility of food prices in the last decade. Population growth and increasing affluence -- predominantly in Asia -- have led to rising food demand since 2000, which in turn has triggered higher global food prices. Between 2000 and 2010, Asia's population grew 12 percent, from 3.7 billion to 4.2 billion, and in 2010 Asians accounted for 60 percent of the world's population. In South-Central and Southern Asia alone, the population increased by 16.5 percent and 16.7 percent, respectively. Meanwhile, wages nearly doubled in Asia from 2000 to 2011, whereas they increased only 18 percent in Africa and 15 percent in Latin America and the Caribbean.
Other factors that affected global food prices in the last decade include an increase in biofuels production, higher-than-normal imports, trade policies, low levels of stocks, rising energy and fertilizer prices, and increased trade within futures markets for food commodities.
"There is reason to believe that food commodity prices will be both higher and more volatile in the decades to come," said Sophie Wenzlau, the study's author. "As climate change increases the incidence of extreme weather events, production shocks will become more frequent. Food prices will also likely be driven up by population growth, increasing global affluence, stronger linkages between agriculture and energy markets, and natural resource constraints." 
Further highlights from the report:

• Between 2000 and 2012, the World Bank global food price index increased 104.5 percent, at an average annual rate of 6.5 percent.
• Despite an end-of-year decline in 2012, international wheat prices were 17 percent higher in January 2013 than they were a year earlier, and maize prices were 11 percent higher. The international price of rice moved up only marginally, by 0.4 percent.
• The World Bank estimates that the 2011 food price spike -- driven by a 57.9 percent increase in global cereal prices between June 2010 and April 2011 -- drove 44 million people into extreme poverty (under US$1.25 a day).
• Between 2000 and 2011, global biofuels production increased more than 500 percent, due in part to higher oil prices and the adoption of biofuel mandates in the United States and European Union. 

Food Price Index mostly unchanged in January

The Food and Agriculture Organization’s Food Price Index held steady at 210 points in January after three straight months of decline.
Increases in oil and fats prices offset lower cereals and sugar quotations, while dairy and meat values remained basically unchanged.
The pause in the index's decline tallies with a significant upward revision in the organization's latest forecast for 2012 world cereal production. This is now estimated at 2,302 million metric tons -- 20 million metric tons up on December 2012's forecast. The change mostly reflects adjustments to maize production estimates in China, North America and the European CIS countries. But even at the new level, global cereal output would still be 2 percent down on the 2011 record crop.
Early prospects for 2013 cereal production point to increased world wheat output. Contributing largely to this prospect is an estimated 4 to 5 percent increase in the area under wheat in the European Union, where weather conditions have also been generally favorable so far. But in the United States, the outlook is not as good. Despite an estimated 1 percent increase in winter wheat plantings and prospects for spring wheat areas to expand, severe drought conditions continue to plague the southern Plains, where the condition of crops is reported to be very poor.
The organization’s Meat Price Index averaged 176 in January, down only marginally from December. Quotations of all meat categories were generally stable, although a slight weakening in poultry and pork prices was evident.

Forecast shows retail food price hike of 3 to 4 percent

The U.S. Department of Agriculture’s forecast for retail food prices indicated an inflation rate from three to four percent, according to a report released January 25.
“We’re still on track for a year of above average food inflation,” said Ricky Volpe, USDA food price economist.
Volpe said the increase in supermarket prices is mostly because of the 2012 drought and its impact on the cost of livestock feed. Volpe said it did little to drive up food costs during the actual year of the drought, but it will carry over to this year.
“Now here we are in 2013 and that’s where we’re going to see the impacts of these higher commodity prices because of the nature and the complexity of the food supply chain,” he said, indicating that the price of poultry, red meat, eggs and dairy products are all included in the projected increase. “These are all categories that rely heavily on feed corn as an input, and they feature minimal processing. Most of these foods are not very storable when they get to the level of the supermarkets, so we’re seeing these price impacts now.”

US food costs up on increased crop prices, says report

In 2012, the average U.S. family of four saw a $2,000 increase in food costs, and a significant factor in that increase can be connected to the rise in grain prices, according to a recent report by FarmEcon LLC. Connected to that, says the report, is the use of corn ethanol for fuel.
The renewable fuel standard requires 13.8 billion gallons of corn-based ethanol to be blended into gasoline in 2013, an amount that will use more than 40 percent of the nation's corn crop, according to the U.S. Department of Agriculture. According to Dr. Thomas Elam, president of FarmEcon, corn is just one of many basic farm inputs used to produce the U.S. food supply. However, with increases in biofuel demand and declining corn production, corn prices have increased sharply. In turn, prices of other major crops have also gone up significantly. This ranges from major field crops like soybeans and wheat, to horticultural crops such as potatoes, strawberries and processing vegetable crops. Higher prices for other crops were necessary in order for those crops to compete with corn for land.
"Absent reform, the increasing RFS will continue to pull more and more agricultural commodity tonnage out of the food sector, further driving up food costs, and cause further reductions in food affordability," said Elam in the report. "Food affordability will continue to decline, even if there is no domestic market for additional ethanol production." Elam said he suggests a revisiting of the renewable fuel standard.

Global food prices set to rise through 2013

Increasing agricultural commodity prices (due largely to unfavorable weather like the ongoing U.S. drought) are causing the world to re-enter a period of "agflation," with food prices forecast to reach record highs and continue to rise well into the third quarter of 2013, according to a recent Rabobank report. In addition, said Rabobank, unlike the staple grain shortage of 2008, 2012's scarcity will affect feed-intensive crops with serious repercussions for the animal protein and dairy industries.
The report estimates that the Food and Agricultural Organization Food Price Index will rise by 15 percent by the end of June 2013. In order for demand rationing to take place, in turn encouraging a supply response, prices will need to stay high. Rabobank said it expects prices — particularly for grains and oilseeds — to remain at elevated levels for at least the next 12 months.
“The impact on the poorest consumers should be reduced this time around, as purchasers are able to switch consumption from animal protein back towards staple grains like rice and wheat," said Luke Chandler, global head of agri commodity markets research at Rabobank. "These commodities are currently 30 percent cheaper than their 2008 peaks. Nonetheless, price rises are likely to stall the long-term trend towards higher protein diets in Asia, the Middle East and North Africa. In developed economies — especially the U.S. and Europe — where meat and corn price elasticity is low, the knock-on effect of high grain prices will be felt for some time to come.”
While the impact of higher food prices should be reduced by favorable macroeconomic fundamentals (low growth, lower oil prices, weak consumer confidence and a depreciated U.S. dollar), interventionist government policies could exacerbate the issue, said the report. Stockpiling and export bans are a distinct possibility in 2012–2013 as governments seek to protect domestic consumers from increasing food prices. Increased government intervention will likely encourage further increases in world commodity and food prices. Rabobank said it expects that localized efforts to increase stockpiles will prove counterproductive at the global level, with those countries least able to pay higher prices likely to see greater moves in domestic food price inflation. This is a vicious circle, with governments committing to domestic stockpiling and other interventionist measures earlier than usual — recognizing the risk of being left out as exportable stocks decline further.
On top of that, global food stocks have not been replenished since 2008, leaving the market without any buffer to adverse growing conditions. Efforts by governments to rebuild stocks could add to food prices and take supplies off the market at a time when they are most needed.

Global food prices to remain high over next decade

While international agricultural commodity markets appear to have entered calmer conditions after record peaks in 2011, food commodity prices are anticipated to remain on a higher plateau over the next decade, underpinned by firm demand but a slowing growth in global production, according to the latest OECD-FAO Agricultural Outlook 2012-2021.
The joint Organization for Economic Cooperation and Development-Food and Agriculture Organization report suggests that in addition to population growth, higher per-capita incomes, urban migration and changing diets in developing countries, as well as rising requirements for biofuel feedstocks, are underpinning demand pressures. At the same time, agricultural output by developed, exporting countries has been slow to respond to higher prices in the last decade. Higher demand will be met increasingly by supplies that come to market at higher cost. With farmland area expected to expand only slightly in the coming decade, additional production will need to come from increased productivity, including by reducing productivity gaps in developing countries, said the report.
The outlook anticipates that agricultural output growth will slow to an average of 1.7 percent annually over the next 10 years, down from a trend rate of over 2 percent annually in recent decades. Higher input costs, increasing resource constraints, growing environmental pressures and the impacts of climate change will all serve to dampen supply response. Much of the projected growth will come from developing countries, which will increasingly dominate in the production of most agricultural commodities, and also take on a more important role in commodity trade.
The Outlook notes that 25 percent of all agricultural land is highly degraded. Critical water scarcity in agriculture is a fact for many countries. Several fish stocks are over-exploited or at risk. There is a growing consensus that extreme weather events are becoming more frequent and climatic patterns are changing in many parts of the world.
Beyond its call for complementary policies to address productivity and sustainability, the report recognizes that the private sector will play the lead role in agriculture going forward. Governments should encourage better agronomic practices, create the right commercial, technical and regulatory environment and strengthen agricultural innovation systems, with attention to the specific needs of smallholders.
Creating the right enabling environment also means ensuring that the business climate is conducive to domestic and foreign investments, so governments should limit trade restrictions as well as those domestic support schemes that distort incentives for production and investment in agriculture. There is a need to develop national investment schemes and increased development assistance to agriculture for R&D, innovation adoption and infrastructure development, said the report.
Developing countries should promote agricultural infrastructure investment in rural areas to improve storage, transportation and irrigation systems, as well as electrification, information and communication systems. Investment in human capital is equally important and depends on more public spending on health care, education and training.

US turkey prices up in fourth quarter 2011

U.S. prices for whole hen turkeys were consistently higher in 2011 than in 2010, according to the U.S. Department of Agriculture.
On a year-over-year basis, monthly frozen whole hen turkey prices have been higher for the last 25 consecutive months. Both lower stock levels and a strong export market have placed upward pressure on prices, said the USDA. December 2011 prices for whole hens averaged $1.07 per pound, down seasonally from November 2011, but 9 cents per pound (9 percent) higher than 2010. Prices in the fourth quarter of 2011 averaged $1.12 per pound, 8 percent higher than the same time in 2010, and 5 cents per pound higher than in the third quarter. With relatively low stock levels going into 2012, whole hen prices are expected to remain above year-earlier levels through first-quarter 2012, then fall to slightly lower than 2011 levels for the rest of 2012. Turkey production in November 2011 was 511 million pounds, down 1.8 percent from 2010 numbers. The decrease in production came from a lower number of birds slaughtered and declines in the average weight per bird at slaughter; the number of turkeys slaughtered was down 0.9 percent from 2010 and the average weight at slaughter fell to just over 28 pounds, a decline of 0.6 percent. With the reductions in weights, the estimate for fourth-quarter 2011 turkey meat production was lowered by 10 million pounds to 1.5 billion pounds, up less than 1 percent from 2010 numbers. The turkey meat production estimate for 2012 is 5.8 billion pounds, up 1 percent from 2011, with the majority of the growth coming in the second half of the year, according to USDA numbers. Ending stocks for all turkey products in the fourth quarter of 2011 are expected to be 205 million pounds, up about 7 percent from the very low stock levels for the same period in 2010. At the end of November 2011, cold storage holdings for turkey totaled 193 million pounds, 11 percent higher than 2010 numbers. The increase was due to larger cold storage holdings of both whole birds (up 18 percent) and turkey parts (up 9 percent), said the USDA. On a year-over-year basis, stocks of whole turkeys have been lower for the last 25 consecutive months. With turkey production expected to be only slightly higher in the first half of 2012 (up less than 1 percent), turkey cold storage totals are expected to remain very close to those for 2011.
For more information and data on U.S. poultry, see www.wattagnet.com/marketdata.html.  

US corn surplus estimates remain low for fall 2012

An estimated 846 million bushels of corn will be on hand at the end of summer 2012, a surplus that satisfies demand for less than 25 days and fails to meet the 30-day supply considered to be a healthy stock, according to the U.S. Department of Agriculture.
A low supply in 2011 contributed to high food prices, which rose between 3.25 percent and 3.75 percent, said the USDA. Food inflation is expected to slow in 2012, dropping to between 2.5 percent and 3.5 percent, but corn is likely to remain above $6 a bushel for all of 2012, which will keep food prices high. Growing demand from livestock producers in China and the U.S. ethanol industry will counter any surpluses, according to the USDA.

New system identifies 'excessive volatility' in corn prices

The Excessive Food Price Variability Early Warning System has been developed to work as a gauge of price swings for corn, wheat and soybeans and can help policy makers identify "excessive volatility," according to the International Food Policy Research Institute.
The system determines the statistical probability of a price move on a particular day, based on trading in the prior 60 sessions, according to Carlos Martins Filho, a senior research fellow at the Institute who helped develop the model. If the chance is 5% or less, he said, the move is deemed extreme or abnormal. “Our goal is here to define a clear method and metric to define when commodities are experiencing clear higher volatility,” said Filho. “You first have to identify, consistently and in a very transparent manner, periods of extreme price volatility. It’s a first step. It’s not a tool that will lead to any policy prescription.”

Biofuels contributing to higher global feed prices, tighter markets

The diversion of crops for biofuels has contributed to global feed and food prices hitting record highs, according to experts.
The United Nations Food and Agriculture Organization has reported that its index of food prices is showing the highest numbers ever, with prices rising 15% from October to January. At the same time, corn prices in the U.S. rose by 73% and the proportion of Chinese cassava going to ethanol jumped to 52% from just 10% in 2008. In the U.S., Congress has mandated that biofuel use must reach 36 billion gallons annually by 2022. The European Union has stipulated that 10% of transportation fuel must come from renewable sources like biofuel or wind power by 2020. Countries like China, India, Indonesia and Thailand have also adopted biofuel targets.
Still, with so many factors affecting food prices and availability, experts say it's difficult to assign a hard number representing precisely what role biofuels play in the statistics. “The problem is complex, so it is hard to come up with sweeping statements like biofuels are good or bad,” said Oliver Dubois, a bioenergy expert at the FAO in Rome. “But what is certain is that biofuels are playing a role. Is it 20 or 30 or 40%? That depends on your modeling.” Dubois and other food experts say they would like to see countries revise their policies so that rigid fuel mandates can be suspended when food stocks get low or prices become too high. “The policy really has to be food first,” said Hans Timmer, director of the Development Prospects Group of the World Bank. “The problems occur when you set targets for biofuels irrespective of the prices of other commodities.” 

Brasil Foods reaches record stock trading after Warren Buffett invests

Poultry exporter Brasil Foods SA reached its highest stock value ever in Sao Paulo trading after Warren Buffett's Berkshire Hathaway Inc. began buying shares in the poultry company.
Brasil Foods climbed 74 centavos, or 2.6%, to 29.45 reais as of 9:37 a.m. EST. Earlier, it touched 29.98 reais, the highest since the company started trading in 1997. "The speculation is that Buffett is seeking to have 5% of the company," said Fausto Gouveia, who helps manage 270 million reais in stocks at Legan Administração de Recursos. "Whoever is short on this stock, is buying shares now."

Ag commodity prices increasing, 'modest' food price increases likely

An increase in agricultural commodity prices has fostered worries about an accompanying increase in food costs, but economists with the Texas AgriLife Extension Service said any overall jump will be "modest."
The U.S. Department of Agriculture has forecast that the consumer-price index for food will rise between 0.5% and 1.5% this year and between 2% and 3% for 2011. “Farm commodity prices fell sharply in 2009 and 2010 after reaching record levels in 2008,” said Jose G. Pena, AgriLife Extension economist-management. “However, food prices continued to rise in 2009 and 2010 even as farm commodity prices returned to 2007 levels.” Factors such as adverse weather, a weaker U.S. dollar, increased exports, higher crude-oil prices and heavy commodity contract buying have all contributed to increasing commodity prices.
“Still, on average, a 50% increase in the price received by the farmer results in only a 10% increase in the retail cost of food,” said Pena. “The recent upward movement in commodities pricing is expected to have little immediate effect on the prices of basic food items.”

Rise in corn prices expected to slow

According to Richard Brock of Brock Associates, who spoke at the U.S. Poultry & Egg Association's Economic Outlook Conference, corn prices will slow and then decline, though how much isn't yet known.
While prices are currently at record highs, the market will "fall hard and fall fast" once it turns, said Brock. "Big bull markets have always been followed by big bear markets," he said. Right now, price forecasts sit at $4.75 to $5.75 with 154 bushels per acre (2010/2011) and $4.20 to $5.50 with 66 bushels per acre (2011/2012).
Brock also warned that more than supply and demand affects prices, pointing out that investments in commodity index funds might be having a significant impact. Regulations, he said, are needed to control the size of the funds.

China looks to state reserves to stabilize pork prices

The Chinese government has sold its second batch this year of frozen pork from state reserves to help stabilize prices, the Ministry of Commerce said on Nov. 10.
The country has "entered its peak season for pork consumption," with average wholesale prices in major cities "up 3.9% since early September to 17.95 yuan (US$2.70) per kilogram," the ministry said in a statement on its website. The statement did not say how much frozen pork has been sold. Pork prices will continue to be closely monitored as they form an important part of the consumer price index.
The National Bureau of Statistics is due to release CPI figures on Nov. 11, with some pundits estimating the measure in October might have risen to a two-year high of more than 4%.