FAO Food Price Index

The FAO is the Food and Agriculture Organization of the United Nations.  Quoting from their web site, they act "as a neutral forum where all nations meet as equals to negotiate agreements and debate policy.  FAO is also a source of knowledge and information.  We help developing countries and countries in transition modernize and improve agriculture, forestry and fisheries practices and ensure good nutrition for all.  Since our founding in 1945, we have focused special attention on developing rural areas, home to 70 percent of the world's poor and hungry people."

 

So that's who they are.  One thing they do is track, through the FAO Food Price Index, the "monthly change in international prices of a basket of food commodities".  This FFPI is further subdivided into five sub-indices, which are:

• The Meat Price Index, which tracks the average of of two different poultry products, three bovine meat products, three pig meat products, and one ovine meat product.
• The Dairy Price Index, which tracks butter prices, cheese prices, casein prices, SMP and WMP prices.
• The Cereals Price Index, which tracks 9 different types of wheat, 1 type of maize[1], and 16 types of rice.
• The Oils and Fat Price Index, which tracks 11 different oils.
• The Sugar Price Index, which tracks - wait for it - the price of sugar.

May's results were mixed.  the FFPI in total fell 1% (to a level of 232), which is still 37% higher than it was in May 2010.  The Meat Price Index rose 1.1%, the Dairy Price Index barely changed, the Cereals Price Index fell 1%, the Oils and Fat Price Index barely changed, and the Sugar Price Index fell 10%.

 

Moving on to the June report, the news is somewhat less encouraging.  The FFPI rose 1% (to a level of 234), putting it 39% higher than it was in June 2010 and only a few points away from its all-time high of 238 (reached in February 2011).  Drilling in to the sub-indices:

• The Meat Price Index hit a level of 180, barely changed from May (poultry was up 3% to set a new record, but pig meat declined). 
• The Dairy Price Index hit 232, also barely changed from May.  Skim milk powder and casein prices increased 5% but whole milk powder prices fell 3%.  Butter and cheese remained stable.
• The Cereal Price Index hit a level of 259, down 1% from May (but up 71% from June 2010).  Most of the improvement is credited to better European weather and Russia's plans to lift their wheat export ban.
• The Oils and Fats Price Index hit a level of 257, barely changed from May.
• The Sugar Price Index hit 359, up 14% from May.  Most of the price increase is driven by short-term demand vs. tight availability.

[1]  You probably know this, but "maize" is also known here in the US as "corn".  Once upon a time, "corn" was a generic term for any sort of grain