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Global food prices trending lower

Global food prices continue to decline. The United Nations Food and Agriculture Organization (FAO) says their Food Price Index declined nearly 2 percent in January. The group credits robust inventories, weak crude oil prices and a strong U.S. dollar.

The FAO Food Price Index is a trade-weighted index that tracks prices of five major food commodity groups on the international markets.

Led by a 7 percent decline in the price of wheat, the Cereal Index declined 3.6 percent for the month and is now 34 percent below the peak in June of 2008.

The Vegetable Oil Index is the lowest it has been since October of 2009. A 3 percent decline in January was due to ample supplies of soy oil and low crude oil prices making soy oil less attractive as a biofuel.

Strong supplies of pig meat pushed the Meat Index 1.6 percent lower while rising butter prices offset lower cheese and milk powder prices leaving the Dairy Index unchanged. Since January of 2014, the Meat Index has increased 6.6 percent but the Dairy Index has dropped 35 percent.

The Index has been declining since April of last year and all indications are it will continue the trend. The cereal crop production estimate for 2014 was raised to more than 2.5 billion metric tonnes. There is more acreage planted to winter wheat in the Northern Hemisphere this year while the maize crop in the Southern Hemisphere is in good shape. Global cereal stocks in 2015 are forecast at 623 million tonnes up 8 percent from 2014.

The overall index for January is 182.7 compared to 203.2 a year ago and the record-high 229.9 set in 2011.