FAI food price index hits a 6 month low ib July

The FAO Food Price Index decreased for a fourth
consecutive month in July mainly due to a sharp decline in
international prices for maize, wheat and certain oilseeds,
reflecting ample supplies for these commodities.
Based on the prices of a basket of internationally-traded
food commodities, the FAO Food Price Index averaged
203.9 points in July 2014, down 4.4 points (or 2.1 percent)
from a revised value in June and 3.5 points (or 1.7 percent)
below the July 2013 level.
"The lingering decline of food prices since March reflects
much better expectations over supplies in the current and
forthcoming seasons, especially for cereals and oils, a
situation that is expected to facilitate rebuilding of world
stocks," said FAO senior economist Concepción Calpe.
In contrast, meat prices rose for the fifth consecutive month
in July, and those for sugar remained firm. The fall in
quotations for grains, oilseeds, as well as dairy products
pushed down the FAO Food Price Index to its lowest level
since January 2014.
"Livestock product markets have their own dynamics: in the
case of meat, beef in particular, many exporting countries
are in a herd rebuilding phase, which is limiting availability
for exports and sustaining prices," Calpe said. "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," she added.
Sharp slide in cereal and oilseed prices
The FAO Cereal Price Index averaged 185.4 points in July,
down 10.7 points or5.5 percent from June and as much as
36.9 points or 16.6 percent below the level one year ago.
In particular the fall in international prices for maize (down
9.2 percent from June) and wheat (down 5.8 percent)
reflected excellent production prospects as well as expected
abundant exportable supplies in the 2014/15 marketing
season.
In contrast, rice prices edged marginally higher, on renewed
import demand, especially as Thailand's sales from public
reserves remained suspended.
The FAO Vegetable Oil Price Index averaged 181.1 points in
July, down 7.7 points or 4.1 percent from June. The decline
continued to be primarily driven by falling soy and palm oil
prices.
Soy oil values fell mainly in response to record crop
prospects for the United States as well as abundant supply
in South America while palm oil quotations eased on
persisting strength in Malaysia's currency and slow global
import demand. Prices for rape and sunflowerseed oil also
weakened, reflecting ample crop prospects for 2014/15.
The FAO Dairy Price Index averaged 226.1 points in July,
down 10.3 points (4.4 percent) over June and 17.5 points
(7.2 percent) less than the same period last year. Reduced
import demand - including a decline in purchases of butter
by Islamic countries during Ramadan - contributed to the
downward trend in dairy prices.
Meat prices rise while sugar remains volatile
A continued strong demand for meat in Asia and particularly
China, helped to edge up the FAO Meat Price Index which
averaged 204.8 points in July, 3.7 points (1.8 percent)
higher than its revised value in June and 25.4 points (14.1
percent) above the same period last year. Average prices
for poultry and ovine meat also rose, while those for pig
meat fell back somewhat from the all-time high registered
in June.
The FAO Sugar Price Index averaged 259.1 points in July,
marginally up by 1.1 points (0.4 percent) from June, and
20.2 points (8.4 percent) higher than in July 2013.
International sugar prices have been relatively volatile over
the last 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
rains in India, the second largest world sugar producer.