The global food commodity prices saw a slight decline in August, with drops in sugar, meat, and cereal prices outweighing increases in vegetable oils and dairy products, according to the Food and Agriculture Organization (FAO) of the United Nations
The FAO's Food Price Index, which monitors monthly fluctuations in the prices of internationally traded food commodities, recorded an average of 120.7 points in August. This is marginally lower than the revised figure for July and reflects a 1.1 percent decrease from the same month in 2023.
Cereal Price Index Trends Downward
The FAO Cereal Price Index fell by 0.5 percent from July, primarily driven by decreased global wheat export prices. This was due to competitive pricing of Black Sea supplies and stronger-than-expected wheat production in Argentina and the United States. Conversely, global maize prices saw a slight uptick due to heatwave-induced yield losses in parts of Europe and North America. Meanwhile, the FAO All-Rice Price Index rose by 0.6 percent, influenced by a seasonal shortage and currency fluctuations in major exporting nations.
Vegetable Oil and Dairy Prices on the Rise
The FAO Vegetable Oil Price Index saw a 0.8 percent increase, hitting a 20-month high. This rise was fueled by higher international palm oil prices, which offset declines in soy, sunflower, and rapeseed oils.
Dairy prices also increased, with the FAO Dairy Price Index rising by 2.2 percent in August. A surge in import demand for whole milk powder and higher cheese prices, driven by robust global demand, contributed to this rise. Additionally, butter prices hit a new record high due to concerns over milk supply in Western Europe.
Decline in Meat and Sugar Prices
The FAO Meat Price Index dipped by 0.7 percent from July, with lower prices for poultry, pig, and ovine meats, which were attributed to weak import demand. However, the price of bovine meat experienced a slight increase.
Sugar prices dropped by 4.7 percent in August, reaching their lowest level since October 2022. This decline was mainly due to an optimistic outlook for upcoming sugarcane harvests in India and Thailand, coupled with falling global crude oil prices. However, late August saw a spike in sugar prices due to concerns about fires in Brazil’s key sugarcane-producing areas.
Global Cereal Production Remains Stable
In its latest Cereal Supply and Demand Brief, FAO slightly reduced its global cereal production forecast for 2024, now projected at 2.851 billion tonnes, nearly unchanged from 2023 levels. This adjustment is largely due to lower expectations for coarse grain production, particularly maize, impacted by hot and dry weather in the European Union, Mexico, and Ukraine.
On the other hand, the FAO raised its forecast for global wheat and rice production, with rice expected to reach a record high of 537 million tonnes. Total global cereal utilization in 2024/25 is predicted to increase by 0.2 percent, reaching 2.852 billion tonnes. This rise is largely driven by anticipated growth in rice consumption.
Global cereal stocks are projected to grow by 1.2 percent by the end of the 2025 season, leading to a stocks-to-use ratio of 30.7 percent. However, international trade in total cereals is expected to decline by 3.3 percent, with coarse grains seeing the largest drop in traded volumes.
While the FAO reports slight declines in global food prices overall, the varying trends across commodities reflect a complex landscape influenced by supply chain factors, weather conditions, and international demand.
