The FAO Food Price Index rose in February, driven by increases in sugar, dairy, and vegetable oil prices, according to a recent report by the Food and Agriculture Organization of the United Nations. The FAO Food Price Index tracks the monthly changes in global food commodity prices and averaged 127.1 points in February, representing a 1.6 percent increase from January and an 8.2 percent rise compared to February 2024.
The surge was primarily fueled by the FAO Sugar Price Index, which saw a 6.6 percent rise from January. This marked a reversal after three months of declines, reaching 118.5 points in February. The increase was linked to concerns over tighter global sugar supplies for the 2024/25 season, particularly due to reduced production forecasts in India and adverse weather conditions in Brazil.
The FAO Dairy Price Index also increased by 4.0 percent in February, averaging 148.7 points. Higher prices for key dairy products, such as cheese and whole milk powder, were driven by robust import demand, which outpaced production in major exporting regions.
The FAO Vegetable Oil Price Index rose by 2.0 percent to an average of 156.0 points, marking a substantial 29.1 percent increase compared to the previous year. Prices for palm, soy, and sunflower oils rose sharply, influenced by seasonal supply constraints in Southeast Asia and strong demand from the biodiesel sector.
The FAO Cereal Price Index increased by 0.7 percent, averaging 112.6 points. Wheat prices saw an uptick due to tighter supplies in Russia and concerns about crop conditions in Eastern Europe and North America. Maize prices also rose, supported by reduced supplies in Brazil and strong export demand from the United States. However, global rice prices fell by 6.8 percent, thanks to ample exportable supplies and weak import demand.
The FAO Meat Price Index remained steady at 118.0 points in February, a marginal decline of 0.1 percent from January. International poultry and pig meat prices eased due to abundant supplies, while prices for ovine and bovine meats remained firm, supported by strong global import demand.
FAO’s latest forecast for global wheat production in 2025 is 796 million tonnes, which marks a modest increase of nearly 1 percent from the previous year. Production gains are expected in the European Union, particularly in France and Germany, where soft wheat sowings are anticipated to rise. However, challenges such as dry conditions in Eastern Europe and excessive rainfall in Western regions may hinder yield improvements. In the United States, wheat acreage is expected to expand, although drought conditions could slightly reduce yields.
Rice production is projected to reach a record high of 543 million tonnes (in milled equivalent) for the 2024/25 season, supported by positive crop prospects in India and favorable conditions in Cambodia and Myanmar. The FAO has raised its estimate for global cereal production in 2024 to 2,842 million tonnes, slightly up from 2023 levels.
Global cereal utilization is expected to rise by 1.0 percent in 2024/25, reaching 2,867 million tonnes. This increase is largely driven by a record level of rice consumption. Wheat utilization is anticipated to remain stable, with a slight decline in food consumption balanced by an increase in industrial use, especially in China.
FAO predicts a 1.9 percent decline in global cereal stocks, forecasting ending stocks for 2025 at 869.3 million tonnes. Higher stocks in Russia and Ukraine are expected to offset reductions in other regions. The global stocks-to-use ratio is projected to fall to 29.9 percent, which still indicates a comfortable supply. Additionally, FAO has revised its forecast for global cereal trade to 484.2 million tonnes, a 5.6 percent decline from the previous season due to shifting export dynamics.
Looking ahead to 2025, the crop outlook is mixed across different regions. In Africa, prolonged dry conditions in North Africa are dampening cereal production prospects, while Southern Africa is expected to see a rebound in crop yields following significant declines in 2024. In Asia, Far East Asia is projected to see continued growth in wheat production, while Near East Asia faces challenges due to low rainfall. Latin America and the Caribbean also face mixed weather conditions impacting maize production in South America, with the risk of stunt disease outbreaks in Argentina. However, good output prospects in Brazil are expected to ensure overall above-average production levels.
The report highlights that 45 countries, including 33 in Africa, nine in Asia, two in Latin America and the Caribbean, and one in Europe, are in need of external food assistance. Conflicts and civil insecurity remain the primary drivers of severe hunger in regions such as the Gaza Strip and Sudan, where populations are facing extreme levels of food insecurity.
