The UN Food and Agriculture Organisation (FAO) food price index averaged 155.7 points in August 2015 – down 5.2% from July – as virtually all major food commodity prices dipped significantly.
The fall, which is the biggest single monthly price crash since December 2008, has been put down to a combination of factors including; ample supplies of food commodities, a slump in energy prices and concerns over China's economic slowdown.
FAO figures showed that sugar prices were the worst hit – as prices fell by 10% an average of 163.2 points in August. The sharp drop was largely the result of the continued depreciation of the Brazilian Real against the US Dollar and firmer expectations that India, the world's second largest sugar producer, will become a net exporter in the current 2015/16 season, said the FAO.
Dairy prices were hit by a 9.1% fall after a substantial drop in prices for milk powders, cheese and butter, while the vegetable oil price index was down 8.6%, which reflected a six-and-a-half year low in international palm oil prices.
Cereal prices were hit by a 7% drop as falling wheat and maize prices reversed two consecutive months of modest increases, but meat prices remained stable.
The latest data from the FAO also shows that cereal production in 2015 stands at 2,540 million tonnes – which is 13.8 million tonnes more than expected in July, but still 21 million tonnes (0.8%) below the 2014 record.
This upward revision resulted from more buoyant production prospects for coarse grains, wheat and rice, said the FAO – which in a new Cereal Supply and Demand Brief raised forecasts for global coarse grains output by 7.5 million tonnes to 1,311 million tonnes.
“As the harvest is nearing completion in the Northern Hemisphere, the global wheat production forecast for 2015 is becoming firmer, with 728 million tonnes now expected, 5 million tonnes more than previously foreseen,” added the FAO in a statement.
“The revision was driven by higher expectations for crops in Australia, the EU, the Russian Federation and Ukraine, more than offsetting a lower production forecast for Canada, where major growing areas continued to be affected by dry conditions.”