FAO Food Price Index (FPI) fell for the tenth-straight month in January as each subindex clocked a monthly drop from December prices. The composite FPI fell 2.5 percent from December and was down 4.9 percent from January 2022. Monthly declines for the subindexes ranged from down 1.6 percent for cereals to down 4.6 percent for vegetable oils.

The 2022 FPI, as a reminder, was up 12.4 percent YOY and up 35.6 percent from the five-year average.

Source: FAO, McKeany-Flavell

The cereals index fell for a third straight month in January, reaching an 18-month low (adjusted for inflation)—in nominal terms, we should note, the index was up 0.1 percent YOY. Per FAO, price moves for grains were mixed in January: corn up slightly on demand for South American exports and poor Argentina weather, rice higher on Asian demand and tightening stocks, sorghum higher in sympathy with corn and on lower expected U.S. production, and cheaper wheat on larger expected crop from Australia and Russia (also weighing on barley).

Edible oils prices have been down in nine of the last ten months and, despite a modest MOM rebound in November, were down significantly in December and January, down 6.5 percent and 4.6 percent, respectively. As a result, oil prices were down 25.8 percent YOY last month. FAO reported weaker prices for nearly all major oils. Reports of flagging export demand weighed on palm and soybean oil prices, while stronger inventories are reported for sunflower and canola.

Down in four of the last six months, sugar prices fell 2.8 percent in January and were up just 1.1 percent YOY. Expectations of good crops in Brazil and Thailand seem to have offset concerns of Indian and Australian output. The market is also eyeing modest gains for the Brazilian real and higher gasoline prices, both of which could crimp Brazilian sugar exports in favor of higher ethanol manufacturing.

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FAO Food Price Index monthly (adj. for inflation)

Source: FAO, McKeany-Flavell
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