FAO food index steady, cereals rise on weather, weaker dollar

Global food prices were largely unchanged in January versus the previous month, the UN’s Food and Agriculture Organization said Thursday.

Cereals, one of the five key food blocks that comprise the FAO Food Price Index, have risen month-on-month as a weaker dollar and renewed weather fears in the Americas supported corn and wheat prices, the agency said.

Prices for cereals averaged 156.2 points in January, up from 152.2 points in December, and 6.3% higher than January of 2017.

Weather has played havoc with Argentina, Brazil and the US in recent weeks, with fears over prolonged dryness in southern Brazil and Argentina prompting fears for the health of the soy and corn crops in those regions.

For the US, a cold snap saw expectations for the wheat crop take a hammering, with crop quality data released towards the end of January seemingly confirming the extent of damage inflicted.

That provided support to key pricing indicators on the CME’s futures market, as front month wheat prices rose from $4.1650/by on January 16, to peak at $4.5725/bu by January 30.

Soybean prices have charted a similar trajectory, moving from $9.50/bu on January 11 to hit $10.0025/bu by January 30.