Food Price Monitor

NOTES ON TAB 1: INTERNATIONAL PRICES

• Commodity prices: Commodity prices refer to prices of internationally traded agricultural commodities in futures and spot markets. Futures market prices are those of futures contracts closest to maturity. Spot market prices are for a selected major variety and spot market (e.g. “USDA No. 1 Hard Winter Wheat” in Kansas City, MO spot market”), as indicated in the table above the graph. Price trends can be viewed for both the actual US dollar price per unit (typically per tonne or bushed) and indexed values. Indexed values are calculated based on January 2012 = 100. Data sources: CME | Bloomberg | FAO GIEWS.
• Composite Food Price Index: Two composite food price indices are shown. The FAO Food Price Index is a measure of the monthly change in international prices of a basket of internationally traded food commodities (2014-2016 = 100). The International Grains Council (IGC) Grains and Oilseeds Index is based on daily composite prices for major grain and oilseed commodities (Jan 2000=100). Data sources: FAO | IGC.
• Price Volatility: Two measures of volatility are shown: the Food Security Portal’s own excessive food price variability index and the coefficient of variation, which is a more conventional measure. The FSP excessive price variability index is in “red alert” when commodity price returns (i.e., day-to-day percentage changes of commodity prices) in futures markets exceed the 95% quantile of past returns. Vertical red lines in the graph indicate where a daily return exceeds this threshold. When it exceeds the threshold, the commodity price is considered to be an “high” or “excessive” volatility. In the early warning alert further below, the volatility status is reported for each commodity. For a further description of this volatility measure go to the Excessive Food Price Variablity Early Warning System tool page. The coefficient of variation (CV) of volatility in daily spot market prices is shown in the second visualization. The CV is a statistical measure of the relative dispersion of data points in a data series around the mean. In the graph it is defined as the ratio of the standard deviation of the past 20 observations of the spot market price (i.e., one month) relative to the mean of that price during that period. Higher values indicate greater volatility.