Global food prices inch higher

Red meat prices fall, while poultry and dairy product prices rise.

Global food prices continued rising for the second consecutive month in July, led by vegetable oils and dairy products, according to the latest U.N. Food & Agriculture Organization (FAO) report.

FAO’s Food Price Index averaged 94.2 points in July, a 1.2% increase from June and nearly 1.0% higher than July 2019. The FAO Food Price Index tracks international prices of the most commonly traded food commodities.

The FAO Dairy Price Index averaged 101.8 points in July, a 3.5% increase from June. In July, all dairy products price rose, moving the overall value 0.7% above the same period last year and, for the first time, above pre-pandemic levels. Milk powder prices, especially for whole milk powder (WMP), rose on account of strong import demand by Asian buyers due to some concerns over the eventual size of export availabilities in Oceania in the 2020-21 production season. Although they remained below the pre-pandemic levels, butter and cheese prices continued to increase, buoyed by robust import demand amid seasonally declining export supplies and steadily rising internal demand in Europe.

The FAO Meat Price Index, on the other hand, fell 1.7% in July to 93.0 points, a 9.2% decrease from July 2019. According to the report, pig and bovine meat prices both fell in July as global import demand volumes remained below export availabilities, notwithstanding the coronavirus-induced disruptions to slaughtering, processing and export activities in key exporting regions.  Poultry meat prices did recover, following five months of consecutive declines, which the report said largely reflected production cuts in Brazil that were triggered by high feed costs and concerns over the demand outlook moving forward. Following a sharp increase in June, ovine meat prices increased only slightly in July, reflecting more subdued demand.

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The FAO Vegetable Oil Price Index increased 7.6% since June to reach a five-month high, with international quotations for the key oils rising amid, in the case of palm oil, likely production slowdowns, revived global import demand and protracted migrant labor shortages.

The FAO Cereal Price Index was nearly unchanged from June, although maize and sorghum prices registered sharp increase -- influenced by large purchases by China from the U.S. -- while rice prices fell, reflecting prospects for large 2020 harvests. Wheat prices changed little amid slow trade activity.

The FAO Sugar Price Index rose 1.4% as strong sugar crush numbers from Brazil only partly mitigated the effects of rising energy prices and the prospects for lower sugar production in Thailand due to a severe drought.

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