Global food commodity prices fell in July for the second consecutive month, according to a benchmark United Nations report released today, August 5, 2021.

The FAO Food Price Index, which tracks changes in the international prices of the most globally traded food commodities, averaged 123.0 points in July 2021, a 1.2 percentage point lower than the previous month but still 31.0 percent higher than its level in the same period of 2020. The drop in July reflected declines in prices of cereals, dairy products and vegetable oils which more than offset increases in meat and sugar quotations for the second consecutive month.

Also, the FAO Cereal Price Index was 3.0 percent lower in July than in June, pushed down by a 6.0 percent month-on-month drop in international maize prices associated with better-than-earlier projected yields in Argentina and improved production prospects in the United States of America, even as crop conditions in Brazil remained a concern.

Prices of other coarse grains such as barley and sorghum also dropped significantly, reflecting weaker import demand. However, wheat quotations were 1.8 percent higher in July, reaching their highest level since mid-2014, in part due to concerns over dry weather and crop conditions in North America.

At the same time, 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.

“International rice prices accelerated their decline in July to hit two-year lows, as new crop arrivals and currency movements compounded the slow pace of sales caused by high freight costs and logistical hurdles” .
FAO

Dairy and Vegetable Oil prices

Furthermore, the FAO Dairy Price Index declined 2.8 percent from June, impacted by slower market activity in the Northern hemisphere due to ongoing summer holidays, with skim milk powder registering the largest drop, followed by butter, whole milk powder and cheese.

Likewise, the FAO Vegetable Oil Price Index reached a five-month low, declining 1.4 percent from June, as lower prices for soy, rape seed and sunflower seed oils more than offset rising palm oil values. According to the Food and Agriculture Organization (FAO), a lower biodiesel blending mandate in Argentina pressured soyoil prices lower, while those for rape seed and sunflower oils were influenced by prospective record supplies for the 2021/22 season.

Sugar and Meat prices

In contrast, the FAO Sugar Price Index increased by 1.7 percent in July, its fourth monthly increase. 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.

Furthermore, the FAO Meat Price Index rose marginally from June, with quotations for poultry meat rising the most due to increased imports by East Asia and limited production expansions in some regions. Bovine meat prices also strengthened, buoyed by high imports from China and lower supplies from major producing regions. Meanwhile, the FAO noted that pig meat prices fell, following a decline in imports by China.