The FAO’s Food Price Index plunged by more than 5 percent during August, the sharpest one-month drop since December 2008, pulled down by ample supplies, lower petroleum prices and the economic slowdown in China. Prices fell for cereals, vegetable oils, dairy and sugar – four of the five sectors tracked by the FAO; meat prices were virtually unchanged for the month. The meat index is down by 18 percent from its record high, set in August 2014.
Due to falling wheat and corn prices, the Cereal Price Index dropped by 7 percent during August and is down 15 percent in 12 months. The Vegetable Oil Index fell by nearly 9 percent during August to its lowest level since March 2009, and the Dairy Price Index was down by 9 percent for the month. The FAO said dairy and vegetable-oil prices were affected by lower demand from China. The Sugar Price Index fell by 10 percent due to weakening exchange rates in Brazil and a large crop in India.
Global grain production is forecast for 2.54 billion tonnes, less than 1-percent below the record 2014/15 harvest, said the FAO’s Cereal Supply and Demand Brief, thanks to larger-than-expected wheat crops in the northern hemisphere and “more buoyant” prospects for corn and rice. With China forecast to import smaller amounts of corn, barley and sorghum, the record-large world stockpile of cereals will decline by only 1 percent during the 2015/16 marketing year. The estimated stocks-to-use ratio of 25 percent would be large enough to hold down commodity prices.