Food Commodities Prices Lowest Since Sept. 2009

July was a good month for food and beverage manufacturers as prices for major food commodities in July hit their lowest average monthly level since September 2009 as sharp drops in the prices of dairy products and vegetable oils more than offset some increases for those of sugar and cereals.

The UN’s Food and Agriculture Organization (FAO) Food Price Index averaged 164.6 points in July, down 1 percent from June, and 19.4 percent from a year earlier.

The Cereal Price Index rose by 2 percent from June, but was still 10.1 percent below July last year’s level. For the second consecutive month, higher wheat and maize prices, in part due to unfavorable weather in North America and Europe, kept the cereal index rising, but rice prices continued to fall.

The Vegetable Oil Price Index was some 5.5 percent below its June level, reaching its lowest value since July 2009. The recent slide was primarily caused by a fall in international palm oil prices due to increased production in Southeast Asia combined with slower exports especially from Malaysia, and a further weakening of soy oil prices on ample supplies for export in South America and a favorable outlook for global supply in 2015/16.

In July, the Dairy Price Index dropped 7.2 percent from the previous month, mainly due to lower import demand from China, the Middle East and North Africa amid abundant European Union milk production which has resulted in good availability of dairy products for export.

The Meat Price Index remained nearly unchanged from the previous month. An increase in international prices of bovine meat offset a decline for pig meat and ovine meat, while prices for poultry remained stable. Prices of beef from Australia, in particular, rose, supported by stronger import demand from the United States, Japan and the Republic of Korea, amongst others.

The Sugar Price Index rose by 2.5 percent from June 2015, largely due to less than ideal harvesting conditions in the main producing region of Brazil.