GLOBAL MACRO
Source: MNI - Market News/Refinitiv
- The rise in food prices over September/October has been broad-based with all FAO categories rising except meat. Vegetable oils rose the most in October up 7.3% m/m and 27.3% y/y driven by lower supply for palm, sunflower, soyoil and rapeseed oils.
- Cereals increased 0.8% m/m after 3.1% but prices still fell 8.3% y/y in October. With the monthly increases driven by wheat on concerns that EU, US & Russian harvests could be impacted by poor weather, while trouble in the Black Sea remains a problem.
- Rice fell 5.6% m/m in October due to a reduction in Indian rice quotations as competition is expected to rise after its export restriction removal. Processed and rough rice prices are down again in November to date, which is good news for Asian CPI inflation.
Non-Japan Asia ex China CPI y/y% vs cereals & rice prices y/y%
Source: MNI - Market News/Refinitiv
- Dairy prices are also rising robustly up 1.9% m/m and 21.4% y/y last month. European milk output is down due to seasonal factors but that has meant that it is struggling to meet external and internal demand for cheese and butter. Whereas strong production in Oceania has meant lower prices for milk powders, according to the FAO.
- Sugar prices rose 2.6% m/m after 10.9% but are still down 18.6% y/y. The recent increase is driven by concerns over Brazil’s harvest given the current drought. There has also been stronger demand for ethanol as Brent crude rose 3% m/m last month.
- Meat prices fell for the second straight month to be up 7.5% y/y.
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