The Food And Agriculture Organization Of The United Nations' Food Price Index Fell Sharply in July

The FAO Food Price Index* 2022 averaged 140.9 points in July, down 13.3 points (8.6%) from a year ago and down for the fourth consecutive month. Nevertheless, the index is still 16.4 points (13.1%) higher than a year ago. The July decline was the largest single-month drop in the index since October 2008, with the vegetable oil and cereal indices moving sharply lower, while the sugar, dairy and meat price indices also declined, but to a lesser extent.

The FAO Cereal Price Index averaged 147.3 points in July, down 19.1 points (11.5%) from a year earlier, but still 21.0 points (16.6%) higher year-on-year. International prices for all cereals covered by the index were down. World wheat prices, which led the decline, fell as much as 14.5% in July, partly due to an agreement between Ukraine and Russia to lift the blockade on Ukraine's main Black Sea ports, indicating that Ukraine is about to resume grain exports. The seasonal supply formed by the ongoing harvest in the Northern Hemisphere also led to pressure on prices. Yet international wheat prices remained up 24.8% year-over-year. International coarse grains prices fell for the fourth consecutive month, slipping 11.2 percent from a year earlier, but still 12.1 percent higher year over year. The agreement to lift the blockade on Ukrainian ports was also the main cause of the 10.7% drop in world corn prices. Harvesting in Argentina and Brazil is progressing faster than a year ago, and the resulting increased seasonal supply of corn has likewise helped ease price pressure. The spillover effects of weak wheat and corn markets also led to a 12.8% and 12.6% drop in sorghum and barley prices, respectively. international rice prices fell in July for the first time since the beginning of 2022, with inconsistent demand from major exporting countries and currency exchange rate fluctuations the main causes.

The FAO Vegetable Oil Price Index averaged 171.1 points in July, down 40.7 points (19.2%) to a ten-month low. Falling world prices for palm oil, soybean oil, rapeseed oil and sunflower oil drove the index down sharply. The prospect of ample export supplies from Indonesia, the world's leading palm oil exporter, drove international palm oil prices to four straight declines in July. Meanwhile, world soybean and rapeseed oil quotes fell due to continued low demand and the expected ample supply of the new crop, respectively. In the case of sunflower oil, weak global import demand led to significant downward movement in international prices despite continued uncertainty over logistics in the Black Sea region. Weaker crude oil prices also put downward pressure on vegetable oil prices.