Global food prices dipped 8.6% in July, falling for the fourth consecutive month after reaching a record high in March, the UN's Food and Agriculture Organization said Aug. 5.
The FAO's food price index averaged 140.9 points in July, down 13.3 points from June -- the steepest monthly fall in index value since October 2008. The slump was led by significant declines in vegoil and cereal prices accompanied by drops in other indexes, such as sugar, dairy and meat.
"The decline in food commodity prices from very high levels is welcome from a food access viewpoint; however, many uncertainties remain, including high fertilizer prices that can impact future production prospects and farmers' livelihoods, a bleak global economic outlook, and currency movements, all of which pose serious strains for global food security," said FAO Chief Economist Maximo Torero in the report.
Export effort pressure vegoil prices
FAO's vegetable oil price index fell to a 10-month low to 171.1 points in July, down 19.2% from June.
The drop was driven by falling prices of palm, soybean, rapeseed and sunflower oils as Indonesia, the world's largest vegetable oil exporter, looked to boost exports while demand stayed sluggish through the month.
The price of crude palm oil FOB Indonesia fell 17.6% in July and was assessed at $937/mt on Aug. 4, according to Platts pricing data from S&P Global Commodity Insights. In the same time, sunflower oil FOB Black Sea price fell 7% and soybean oil FOB Brazil Paranagua fell 8%.
Lower crude oil prices also exerted pressure on vegoil values, the FAO said.
Sharp decline in cereals
The FAO cereal price index fell 11.4% to 147.3 points in July due to sharp declines in wheat, corn and coarse grain prices. However, the index was nearly 17% higher on the year.
Wheat prices fell 14.5% in July, largely in reaction to the grain passage deal between Russia and Ukraine opening up supplies from Ukraine through the Black Sea, the FAO said.
The UN and Turkey brokered a deal between Russia and Ukraine July 22 to resume Ukrainian exports through the Black Sea, which had stopped in February.
Wheat prices with origins in Ukraine, Russia and Australia declined nearly 3% during July, according to S&P Global data.
For corn, prices saw a 10.7% decline due to a likely increase in supply from Ukraine and increased availability from Argentina and Brazil where the harvest is ongoing, according to the FAO.
Coarse grain prices also fell 11.2% in line with lower wheat and corn prices, the FAO said.
At the same time, corn prices with origins in Brazil, Argentina and the US rose 2%-6% during July, according to S&P Global data.