The prices of agricultural commodities in global markets declined in July for a fourth month, to a six-month low.
This followed a sharp decline in the price of maize, wheat and certain oilseeds, reflecting ample supplies of these commodities globally.
The fall in global prices resulted in a drastic decline in the Food Price Index compiled by the United Nations’ Food and Agricultural Organization.
Based on the prices of a basket of internationally traded food commodities, the FAO Food Price Index averaged at 203.9 points in July, down 4.4 per cent (2.1 percentage point) from a revised value in June. This level was seen earlier in January, at 203.2 points.
“The lingering decline of food prices since March reflects much better expectations over supplies in the current and coming seasons, especially for cereals and oils, a situation expected to facilitate rebuilding of world stocks,” said FAO senior economist Concepción Calpe.
While grains, oilseeds and dairy products touched their lowest level since January, meat prices rose for a fifth month in July. The price of sugar remained firm, said a report from FAO.
“Livestock product markets have their own dynamics. In the case of meat, beef in particular, many exporting countries are in a herd rebuilding phase, limiting the availability for exports and sustaining prices,” said Calpe.
“As for dairy products, supplies available for trade appear to be abundant, which, along with a faltering import demand, has weighted on July’s quotations.”
The recent sharp slide in cereal prices reflected significant falls in the international prices of maize (down 9.2 per cent) and wheat (down 5.8 per cent), a reaction to excellent production prospects in many major producing countries and to the anticipation of abundant exportable supplies in the 2014-15 marketing season.
On the other hand, rice prices edged marginally higher, on renewed import demand, especially as Thailand’s sales from public reserves remained suspended.
Prices of soy and palm oil also remained subdued in July. Soy oil values fell mainly in response to record crop prospects for the United States, as well as abundant supply in South America.
Palm oil quotations eased on persisting strength in Malaysia’s currency and slow global import demand.
Prices for rape and sunflower seed oil also weakened, reflecting ample crop prospects for 2014-15.
Reduced import demand, including a decline in purchase of butter by Islamic countries during Ramadan, contributed to the downward trend in dairy prices. In contrast, the average prices for poultry and ovine meat rose.
Those for pig meat fell somewhat from the all-time high of June. This resulted in a continued strong demand for meat in Asia and particularly China, helping to edge up the FAO Meat Price Index.
It averaged 204.8 points in July, 3.7 points (1.8 percentage point) higher than its revised value in June and 25.4 points (14.1 per cent) above the same period last year.
International sugar prices have been relatively volatile over the past three months, amid uncertainty over the impact of a drought on sugarcane in Brazil, the world’s largest producer and exporter, and indications of below average monsoon rain in India, the second largest world producer.