Sharp declines in the dairy and sugar prices, dropping by 6 percent or more in a month, pulled down the monthly Food Price Index to its lowest level this year, said the UN Food and Agriculture Organization. The index, which measures international prices for a basket of commodities, had been rising steadily until June.
The FAO said the index fell by 3.7 percent in July, with decreases in all five of its commodity groups. Dairy prices were down by 6.6 percent and the sugar index, down by 6 percent for the month, reached nearly a three-year low due to improved prospects for the sugar crop in India and Thailand. Cereal grains were down by 3.6 percent and now register lower than in July 2017.
Vegetable oils fell for the sixth month in a row and are at the lowest level since January 2016. “Part of the July slide (of 2.9 percent) was driven by spill-over weakness from the soybean market, which is affected by the trade dispute between China and the United States,” said the FAO. Meat prices declined by 1.9 percent in July.
In a companion report, the FAO forecast a 2.4 percent decline in the global cereal grains harvest from the record 2.65 billion tonnes of 2017/18 due to smaller corn and wheat production in the EU, Russia and Ukraine. “Global cereal stocks accumulated over the past five seasons would have to be drawn down to 749 million tonnes, over 7 percent from their opening levels” to compensate for rising food, feed and industrial demand for grain.