A 3.6% fall in the UN Food and Agriculture Organisation (FAO) monthly food price index in the month of August means that the price for an average basket of global commodities is the cheapest it has been since September 2010.
According to the new food price data, and with the exception of meat, prices for all major commodity groups fell ‘markedly’ in August – leaving the overall index price at a four-year low of 196.6 points.
The report noted that the impact of Russian sanctions on the import of food commodities in to the country at the start of August has already begun to create an abundance of foods – leading to a depression in prices.
Dairy prices were hit the hardest in August, said the FAO, revealing an 11.2% drop in prices over the previous month – meaning that dairy prices are now 18.9% cheaper than they were at the same time last year. A surplus in supply coupled with reduced import demand – partly as a result of the Russian sanctions and also from a reduction in Chinese imports of whole milk powder – are the key drivers for market uncertainty and plummeting dairy prices, said the FAO.
Cereal prices fell by 1.5% overthe month of July, but are now 11.7% lower than last year, said the FAO – noting that another record year for wheat production have meant that prices for the staple grain continued to slide in August, reaching their lowest value since July 2010.
“Similarly, near-ideal growing conditions in key producing areas, coupled with abundant stocks, have seen maize prices retreat to a 4-year low,” said the FAO. “However rice bucked the trend in grains, with its prices rising in August, reflecting increased import demand, lower-than-expected releases from stockpiles by Thailand, and unfavorable weather affecting some crops in Asia.”
Oils and sugar down, but meat remain strong
Vegetable oils saw an 8% drop in prices during August, leaving prices at 166.6 points – the lowest level since November 2009. Meanwhile, sugar prices witnessed a 5.7% drop since July, but remained 1% higher than the same period last year – at 244.3 points.
Meat prices, however, continued to rise, and are now 14% higher than august 2013.