World food prices in July decreased by 8.6% compared to June. This is the sharpest decline since October 2008, according to the FAO (Food and Agriculture Organization of the United Nations).
The decline continues for the fourth month in a row after the historical maximum recorded in March.
The FAO Food Price Index stood at 140.9 in July, down 8.6% from its June level. However, it is still 13.1% higher than in July last year. “The fall in the index in July was the sharpest since October 2008 and was driven by large declines in vegetable oil and cereals price indices and somewhat smaller declines in sugar, dairy and meat price indices,” the FAO said in a survey.
The grain price index in July decreased by 11.5% compared to June, but remained 16.6% higher than in July 2021. In part, prices fell in July due to an agreement reached between Ukraine, Russia, Turkey and the UN to resume grain exports from Ukraine. In addition, the start of harvesting in the Northern Hemisphere contributed to lower prices. At the same time, international wheat prices are still 24.8% higher than in July last year.
“International prices for feed grains also continue to show a downward trend for the fourth month in a row: they fell by 11.2% compared to June, but remain 12.1% higher than last year. The main reason for the fall in world prices for corn by 10, 7% was the conclusion of an agreement to unblock Ukrainian ports. The seasonal increase in supply in Argentina and Brazil also contributed to the decline in prices, where harvesting is ahead of last year’s figures,” the report says.
The price index for vegetable oils in July fell by 19.2%, to its lowest level in the last 10 months. “Such a sharp drop was caused by a decline in world prices for palm, soybean, rapeseed and sunflower oils,” the document explains. Moreover, despite the ongoing uncertainty with logistics in the Black Sea region, international prices for sunflower oil have significantly decreased against the backdrop of a reduction in import demand in the world as a whole. The decrease in world quotations of vegetable oils was also facilitated by the reduction in prices for crude oil.
The price index for dairy products last month decreased by 2.5% compared to June, and increased by 25.4% compared to July last year. International quotations of skimmed milk powder, as well as butter and whole milk powder, fell the most, due to weak market activity in Europe due to the onset of the summer holiday period, FAO experts explained. At the same time, world cheese prices remained stable, as strong domestic sales in European tourist destinations offset weak import demand in international markets.
The Meat Price Index fell 0.5% in July, the first drop after a continuous six-month rise.
The sugar price index in July decreased by 3.8% compared to June. The decline continues for the third month in a row and reached the lowest value in the last five months, the review explains. “International sugar quotations were affected by concerns about the expected further slowdown in the global economy in 2022 and the resulting decrease in demand. In addition, the weakening of the exchange rate of the Brazilian real against the US dollar and the reduction in ethanol prices, which led to an increase in the volume of sugar production in Brazil in the first half of July compared to previous forecasts. Prices were also affected by favorable forecasts for sugar production in India and a possible increase in its exports. However, concerns about the impact of prolonged hot and dry weather on crops in the European Union prevented prices from dropping even lower, the document says.
The FAO Food Price Index is a weighted average that tracks international price movements for five major food commodity groups.
