ROME, ITALY — Firmer prices for soy and palm oils helped drive a 1.8% monthly increase in the January Food Price Index, the Food and Agriculture Organization (FAO) said on Feb. 7.

The index, which is an indicator of the monthly changes in international prices of food commodities, averaged 164.8 in January. It was 2.2% below the average in the same month a year ago.

With major grain prices tightening, the Cereal Price Index was up some from December, averaging 168.1 points.

The Vegetable Oil Price Index saw a 4.3% increase led by a seasonal production decline in major palm oil producing countries. International soy oil prices also rose on the back of robust import demand for South American supplies.

FAO also increased its 2018 cereal production estimate to 2.611 billion tonnes, reflecting increases in corn, wheat and rice.

Wheat prospects are positive with significant rebounds in the E.U. and Russia, FAO said.

Corn prospects are strong in Argentina and Brazil while dry weather has hurt yield prospects in South Africa.

Cereal utilization is estimated at 2.657 billion tonnes, a 1.7% increase from 2017-18.

Australia is expected to need more wheat for livestock due to the impact of dry weather on grazing pastures. China, Mexico and the U.S. are expanding the use of coarse grains to an all-time high.

World cereal stocks are projected to fall by 45 million tonnes, or 5.6%, from their record-high opening levels. This would result in the world stocks-to-use ratio for cereals declining to 28.5%, down from a nearly two-decade high of 30.8% in 2017-18.

International trade in all cereals will likely approach 416 million tonnes in the 2018-19 marketing season.