Photo Credit: Martin LaBar

The most recent edition of the FAO Food Price Index rose to 179.1 points in July, up 3.9 points from June and 10.2 percent above July 2016 levels. This marks the third month of consecutive increase. Supply constraints and currency movements supported to cereal, sugar, and dairy prices. Meat values remained steady in July, while vegetable oil prices fell.

The FAO Cereal Price Index is up 8 points since last month; cereal prices have continually risen over the past three months. Quality concerns over North American wheat continue as hot and dry weather has deteriorated that crop. Firmer rice quotations due to seasonal tightness were tempered by a slowdown in global demand. Maize values remained steady in July due to improved weather conditions in the United States.

The FAO Vegetable Price Index is down 1.1 percent from June and is at its lowest rate since August 2016. Palm oil, the key commodity in the index, has continued to slide down due to weak global import demand. However, soy oil prices have firmed due to dry weather conditions in the United States, which have led to concerns around the growing conditions in major producing regions of the country.

The Dairy Price Index is up 52.2 percent since its July 2016 values, but is still 21 percent below the peak values seen in February 2014. Butter, cheese, and Whole Milk Powder (WMP) values increased, while those of Skim Milk Powder (SMP) declined due to slack demand and prospects of larger releases from EU intervention stocks. The Meat Price Index is virtually unchanged since last month; it is 8.2 percent higher than July of 2016, but still 17.4 percent below its peak in August 2014.

The Sugar Price Index averaged 207.5 points in July, still 26 percent below its value a year ago. July was the first month in which global sugar prices increased since the beginning of the year. The main catalysts behind this increase are the strong appreciation of the Brazilian real and favorable weather that aided Brazil’s harvest.

By: Jenn Campus

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