Vegetable oil and cereals pull the food price index down in July

The food price index recorded a significant drop in July, led by the Decline in world markets for major cereals and vegetable oilsreported this Friday the Food and Agriculture Organization of the United Nations (FAO), responsible for developing this global reference.

The FAO specified that the indicator decreased 8.6% with respect to June, to settle at 140.9 points. The pullback marked the fifth straight monthly decline since hitting all-time highs earlier in the year.

Despite the decline, the basket of basic food products is still a 13.1% higher than July 2021.

uncertainty persists

According to the chief economist of the FAO, the decrease in food prices is positive, especially after the increase in prices observed, which mainly affected the poorest families in all countries.

“However, many uncertainties remain, including high fertilizer prices, which may affect future production prospects and the means of subsistence of the farmers”, explained Máximo Torero.

In addition, the economist cited the gloomy global economic projections and currency fluctuations as threats to food security.

One of the products that allowed the decrease in the index was vegetable oil, whose price fell by 19.2% from June to July, to reach its minimum mark in ten months.

The FAO noted that international prices for all types of oil fell, with palm oil prices declining on prospects for a large output available for export from Indonesia, while sunflower oil fell sharply on weak global import demand. Lower crude oil prices also pushed vegetable oil values ​​down.

Wheat leads the decline in cereals

On the other hand, the prices of cereals fell 11.5% in the month, although they remained 16.6% above their July 2021 value.

The reduction of up to 14.5% in world wheat prices as result of the agreement reached between Ukraine and Russia to unblock exports from key Black Sea ports, it dragged down all grains included in the index. The increase in the availability of cereals in Argentina and Brazil also influenced this fall.

The international prices of rice went down for the first time in 2022.

Sugar

Sugar, another food item in the basic basket, fell by 3.8% compared to June due to concerns about the outlook for demand given expectations of a largest global economic slowdowna weakening of the Brazilian real and lower ethanol prices that fueled higher sugar production in Brazil.

Signs of higher exports, as well as favorable production prospects in India, also contributed to the drop in world sugar prices, while hot and dry weather in the European Union raised concerns about sugar beet yields and prevented more pronounced falls in prices.

FAO/Alessia Pierdomenico

Dairy products

dairy and meat

dairy prices down 2.5% from June to July, but still persist at a level 25.4% higher than their July 2021 value. Powdered milk and butter prices fell, while cheese prices remained stable, driven by by demand in European tourist destinations.

The FAO meat price index also fell in July, with 0.5% less than in June, due to the weakening of import demand for beef, sheep and pork. By contrast, international poultry meat prices hit an all-time high, supported by strong global import demand and tight supplies due to outbreaks of avian flu in the Northern Hemisphere.