World Food Prices Ease in January, Stocks Hit 25-Year High
Rome: Global food commodity prices extended their downward trajectory in January for a fifth consecutive month, reflecting a combination of ample supplies, easing demand pressures in some markets and favourable production prospects, according to the latest benchmark assessment released by the Food and Agriculture Organization of the United Nations (FAO). The FAO Food Price Index, which measures monthly changes in international prices of a basket of globally traded food commodities, averaged 123.9 points in January, down 0.4 per cent from December and 0.6 per cent lower than its level a year earlier.
The continued softening was led by declines in dairy, sugar and meat prices, underscoring easing conditions in several key food markets. Dairy prices recorded the sharpest monthly fall, dropping five per cent, driven mainly by lower international quotations for cheese and butter amid ample export availabilities. In contrast, skim milk powder prices firmed, supported by renewed import demand from the Near East, North Africa and parts of Asia, indicating divergent demand patterns within the dairy complex.
Sugar prices fell by one per cent in January, reflecting expectations of increased global supplies in the current season. The outlook is underpinned by a significant production rebound in India, favourable growing conditions in Thailand and an overall positive production scenario in Brazil, collectively easing concerns over supply tightness that had supported prices earlier.
Meat prices declined by 0.4 per cent, largely due to lower pig meat quotations amid ample global supplies and subdued international demand. Poultry meat prices, however, moved higher, driven mainly by strong export demand for Brazilian shipments. Prices of ovine meat remained broadly stable, while bovine meat prices were supported by increased exports from Brazil to China, which helped offset the rapid exhaustion of the United States of America’s tariff-free quota for beef.
Cereal prices showed mixed movements. The FAO Cereal Price Index edged up by 0.2 per cent from December, despite marginal declines in global wheat and maize prices. Ample wheat stocks helped counter weather-related concerns affecting dormant crops in the Russian Federation and the United States. In maize markets, comfortable global supplies offset the impact of adverse weather conditions in Argentina and Brazil, as well as strong ethanol demand in the United States. By contrast, the FAO All-Rice Price Index rose by 1.8 per cent, reflecting firmer international demand for fragrant rice varieties.
Vegetable oil prices moved higher, with the FAO Vegetable Oil Price Index increasing by 2.1 per cent in January. Palm oil prices rose due to seasonal production slowdowns in Southeast Asia, combined with firm global import demand. Soy oil prices rebounded on tightening export availability in South America and expectations of robust biofuel demand in the United States, while sunflower oil prices increased amid supply tightness in the Black Sea region. These gains were partially offset by a decline in rapeseed oil prices, reflecting ample availability in the European Union following large recent imports.
Beyond monthly price movements, FAO’s latest Cereal Supply and Demand Brief points to a structurally well-supplied global cereals market. Global cereal production in 2025 is now forecast at a record 3.023 billion tonnes, with record harvests expected for wheat, coarse grains and rice. The upward revision reflects higher-than-anticipated wheat yields in Argentina, Canada and the European Union, alongside expectations of expanded maize plantings and improved yields in China and the United States. Global rice output is also projected to rise, with production gains led by India, Bangladesh, Brazil, China and Indonesia.
Looking ahead, FAO’s assessment of 2026 crop prospects indicates divergent planting trends across hemispheres. Winter wheat plantings in India are forecast to reach a record level, supported by high domestic prices and favourable weather conditions. In contrast, winter wheat plantings in the United States are expected to decline amid lower prices and drier-than-normal conditions in key producing areas. In the southern hemisphere, coarse grain harvesting is set to begin in the second quarter of 2026, with generally favourable conditions reported in Argentina, Brazil and South Africa.
World cereal utilisation in the 2025/26 season is forecast to increase by 2.2 per cent from the previous year, reflecting rising food, feed and industrial use. However, global cereal stocks are projected to expand at a faster pace, rising by 7.8 per cent to a record level, with inventories of all major cereals, including rice, expected to grow. As a result, the global cereal stocks-to-use ratio is anticipated to climb to 31.8 per cent, its highest level since 2001, signalling a substantial buffer against potential supply disruptions.
International cereal trade during the 2025/26 marketing year, defined on a July–June basis, is forecast to grow by 3.6 per cent compared with the previous year, reflecting increased export availability and steady import demand across regions.
FAO’s Agricultural Market Information System, which also released its monthly Market Monitor, noted that international markets for major food crops have displayed notable stability in recent periods. However, the report cautioned that this resilience largely reflects a favourable confluence of ample harvests, well-functioning supply chains and adequate fertiliser availability. It warned against assuming that global food commodity markets have become structurally less vulnerable to shocks, stressing that weather extremes, geopolitical tensions or disruptions to input supplies could quickly alter the current balance.
– global bihari bureau
