Global Food Prices Fall in July to Lowest Point in Six Years
Global food prices fell to their lowest point in six years last month due to a significant drop in the value of vegetable oils and dairy products offsetting increases in the value of sugar and cereals according to the UN Food and Agriculture Organization (FAO) food price index.
The FAO food price index measures monthly values for a basket of oilseeds, cereals, dairy, meat and sugar products – July’s value average 164.6 points, a decline of 1.7 points, or 1% from June.
After almost 12 months of consecutive declines in food prices, this makes July’s value the lowest index value since September 2009 due to generally high food supplies and an ease in demand.
The falling food price index values are indicative of the market effects on wider commodity prices, which are pressured by high supplies, interest rates strengthening the dollar, and economic conditions in China.
The largest drop in July was seen in the dairy index, which fell by 7.2% from June because of low demand for imports from China, North Africa and the Middle East, mixed with abundant supply in the EU.
The July vegetable oil price index fell 5.5% from the previous month – falling to its lowest value since July 2009 – mainly due to increased production in South East Asia, healthy export supplies in South America, slower exports causing a drop in global prices, and a positive outlook for global supply for the 2015/16 season.
The meat price index remained unchanged overall month on month, with an increase in bovine meat offsetting a decrease in pork and ovine meat, as poultry prices remain unchanged.
The sugar price index increased 2.5% from June because of harvesting difficulties occurring in the main production regions of Brazil.
July also marked the second consecutive month reporting higher maize and wheat prices as a result of adverse weather conditions in North America and Europe.