FAO announces a decline in Global food commodity prices

Rome: Global food commodity prices fell sharply in July, with prices of major grains and vegetable oils falling by double-digit percentages, the United Nations' Food and Agriculture Organization (FAO) reported on Friday. The closely watched FAO food price index fell 8.6 per cent from June to 140.9 points in July, the fourth straight monthly decline since hitting an all-time high earlier this year.

The Index, which tracks monthly changes in the international prices of a basket of commonly-traded food commodities, nevertheless, remained 13.1 per cent higher than in July 2021.

"The decline in food commodity prices from very high levels is welcome, especially when seen from a food access viewpoint; however, many uncertainties remain, including high fertiliser prices that can impact future production prospects and farmers' livelihoods, a bleak global economic outlook, and currency movements, all of which pose serious strains for global food security," said FAO Chief Economist Maximo Torero.

The FAO Vegetable Oil Price Index decreased by 19.2 per cent in July from June, marking a 10-month low. International quotations for all oil types fell, with palm oil prices declining due to prospects of ample export availabilities out of Indonesia, those of rapeseed oil responding to expectations of ample new crop supplies, and soy oil prices down due to protracted sluggish demand.

Sunflower oil prices also dropped markedly amid subdued global import demand despite continued logistical uncertainties in the Black Sea region. Lower crude oil prices also pressured vegetable oil values down.

The FAO Cereal Price Index dropped by 11.5 per cent in the month, while remaining 16.6 per cent above its July 2021 value. Prices of all the cereals represented in the index fell, led by wheat, for which world prices declined by as much as 14.5 per cent, partly in reaction to the agreement reached between Ukraine and the Russian Federation to unblock exports from key Black Sea ports and partly to seasonal availability from ongoing harvests in the northern hemisphere.

World coarse grain prices declined by 11.2 per cent in July, with those of maize down by 10.7 per cent, also due in part to the Black Sea agreement as well as increased seasonal availabilities in Argentina and Brazil.

International rice prices also declined for the first time in 2022.

The FAO Sugar Price Index fell by 3.8 per cent from June amid concerns over demand prospects due to expectations of a further global economic slowdown, a weakening Brazilian real, and lower ethanol prices resulting in greater sugar production in Brazil during the month than previously expected.

Indications of greater exports, as well as favourable production prospects in India, also contributed to the decline in world sugar prices, while hot and dry weather in the European Union spark concerns about sugar beet yields and prevented sharper price declines.

The FAO Dairy Price Index decreased by 2.5 per cent from June, amid lacklustre trading activity, but it still averaged 25.4 per cent above its July 2021 value. Prices of milk powders and butter declined, while those of cheese remained stable, buoyed by demand in European tourist destinations.

The FAO meat price index also fell in July by 0.5 per cent from June as import demand for beef, eggs and pork weakened. In contrast, international poultry prices hit an all-time high, driven by firm global import demand and tight supply due to an outbreak of avian influenza in the Northern Hemisphere.

With inputs from IANS