Global food prices decline in July

The FAO Food Price Index, which tracks monthly changes in the international prices of commonly traded food commodities, averaged 123 points in July 2021, down 1.2% from June but still 31% higher than its level in July 2020. The drop in July reflected declines in the prices of cereals, dairy and vegetable oils that offset increases in meat and sugar quotations for the second consecutive month.

The Cereal Price Index averaged 125.5 points in July, down 3% from June but still 29.6% above its July 2020 value. International maize prices fell by 6% month-on-month on better yields than earlier projected in Argentina and improved production prospects in the U.S. Barley and sorghum export prices also fell in July, by 6.4% and 5.3%, respectively, mostly reflecting weaker import demand. Wheat quotations rose 1.8% in July, reaching its highest level since mid-2014, due in part by continued concerns over crop conditions in North America. International rice prices hit two-year lows, impacted by currency movements and a slow pace of sales caused by high freight costs and logistical hurdles.

The Vegetable Oil Price Index averaged 155.4 points in July, reaching a five-month low. Price quotations fell 1.4% percent from June as lower prices for soy, rape and sunflower seed oils more than offset rising palm oil values. A lower biodiesel blending mandate in Argentina pressured soy oil prices lower, while those for rape and sunflower oils were influenced by prospective record supplies for the 2021/22 season.

The Dairy Price Index averaged 116.5 points in July, down 2.8% from June, declining for the second consecutive month, following 12 months of continuous increases. The index remained 14.5%) above the corresponding month last year. In July, international quotations for all dairy products represented in the index fell, with skim milk powder (SMP) registering the biggest drop, followed by butter, whole milk powder (WMP) and cheese, principally reflecting reduced import demand for spot supplies. Slower market activity in the Northern hemisphere due to the ongoing summer holidays, coupled with expectations for rising export availabilities in the period ahead, especially from Oceania, also affected prices.

The Sugar Price Index averaged 109.6 points in July, up 1.7% from June, marking the fourth consecutive monthly increase and the highest level since March 2017. The rise was mostly related to firmer crude oil prices as well as uncertainties over the impact of recent frosts on yields in Brazil, the world’s largest sugar exporter, while good production prospects in India prevented a larger jump.

The Meat Price Index averaged 110.3 points in July, up marginally from June, putting the index 19.6% above the corresponding month last year. Quotations for poultry meat rose the most, underpinned by increased imports by East Asia amid limited production expansions in some producer regions, while those of ovine meat increased on high import purchases and seasonally declining supplies from Oceania. Bovine meat prices also strengthened, reflecting the tightening of global markets due to lower supplies from major producing regions and continued high imports, especially by China. Conversely, pig meat prices fell, following a decline in imports by China, notwithstanding limited supplies from Germany due to the spread of African swine fever in some pig farms.

The FAO Food Price Index, which tracks monthly changes in the international prices of commonly traded food commodities, averaged 123 points in July 2021, down 1.2% from June but still 31% higher than its level in July 2020. The drop in July reflected declines in the prices of cereals, dairy and vegetable oils that offset increases in meat and sugar quotations for the second consecutive month.

The Cereal Price Index averaged 125.5 points in July, down 3% from June but still 29.6% above its July 2020 value. International maize prices fell by 6% month-on-month on better yields than earlier projected in Argentina and improved production prospects in the U.S. Barley and sorghum export prices also fell in July, by 6.4% and 5.3%, respectively, mostly reflecting weaker import demand. Wheat quotations rose 1.8% in July, reaching its highest level since mid-2014, due in part by continued concerns over crop conditions in North America. International rice prices hit two-year lows, impacted by currency movements and a slow pace of sales caused by high freight costs and logistical hurdles.

The Vegetable Oil Price Index averaged 155.4 points in July, reaching a five-month low. Price quotations fell 1.4% percent from June as lower prices for soy, rape and sunflower seed oils more than offset rising palm oil values. A lower biodiesel blending mandate in Argentina pressured soy oil prices lower, while those for rape and sunflower oils were influenced by prospective record supplies for the 2021/22 season.

The Dairy Price Index averaged 116.5 points in July, down 2.8% from June, declining for the second consecutive month, following 12 months of continuous increases. The index remained 14.5%) above the corresponding month last year. In July, international quotations for all dairy products represented in the index fell, with skim milk powder (SMP) registering the biggest drop, followed by butter, whole milk powder (WMP) and cheese, principally reflecting reduced import demand for spot supplies. Slower market activity in the Northern hemisphere due to the ongoing summer holidays, coupled with expectations for rising export availabilities in the period ahead, especially from Oceania, also affected prices.

The Sugar Price Index averaged 109.6 points in July, up 1.7% from June, marking the fourth consecutive monthly increase and the highest level since March 2017. The rise was mostly related to firmer crude oil prices as well as uncertainties over the impact of recent frosts on yields in Brazil, the world’s largest sugar exporter, while good production prospects in India prevented a larger jump.

The Meat Price Index averaged 110.3 points in July, up marginally from June, putting the index 19.6% above the corresponding month last year. Quotations for poultry meat rose the most, underpinned by increased imports by East Asia amid limited production expansions in some producer regions, while those of ovine meat increased on high import purchases and seasonally declining supplies from Oceania. Bovine meat prices also strengthened, reflecting the tightening of global markets due to lower supplies from major producing regions and continued high imports, especially by China. Conversely, pig meat prices fell, following a decline in imports by China, notwithstanding limited supplies from Germany due to the spread of African swine fever in some pig farms.