Food & Beverage Perspectives
Food Commodities’ Prices Drop Sharply in August

Food Commodities Prices Drop Sharply in August

The food industry has reason to exhale a little about costs as international food commodity prices continued to decline in August as ample supplies, a slump in energy prices and concerns over China’s economic slowdown all contributed to the sharpest fall of the UN’s Food and Agriculture Organization (FAO) Food Price Index in almost seven years.

The food industry has reason to exhale a little about costs as international food commodity prices continued to decline in August as ample supplies, a slump in energy prices and concerns over China’s economic slowdown all contributed to the sharpest fall of the UN’s Food and Agriculture Organization (FAO) Food Price Index in almost seven years.

The Index averaged 155.7 points in August 2015, down 5.2 percent from July, the steepest monthly drop since December 2008, with virtually all major food commodities registering marked dips.

The Cereal Price Index averaged 154.9 points, down 7 percent from July and 15.1 percent from last year—a decline driven by falling wheat and maize prices that reversed two consecutive months of modest increases. Continued improvements in production prospects for 2015/16 were largely behind the cereal price slides.

The Vegetable Oil price index averaged 134.9 points in August, down 8.6 percent from July, and its lowest level since March 2009. The fall primarily reflected a 6-and-a- half year low in international palm oil prices, mainly the result of slowing import demand, notably by India and China, amid expectations of rising production.

The Dairy Price Index was down by 9.1 percent to 135.5 points thanks to a substantial drop in prices for milk powders, cheese and butter. Much of the weakness attributed to softening import demand from China, the Near East and North Africa.

The Sugar Price Index was down 10 percent from July to an average of 163.2 points in August, largely the result of the continued depreciation of the Brazilian Real against the U.S. Dollar and firmer expectations that India, the world’s second largest sugar producer, will become a net exporter in the current 2015/16 season.

The Meat Price Index remained virtually unchanged from the previous month. Nevertheless, compared to the meat price index's historic peak in August 2014, overall prices were down by 18 percent.

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