Food Price Index down for fourth straight month in July
FAO’s Food Price Index (FPI) fell for a fourth straight month in July, down by nearly 9 percent from June, adjusted for inflation, the steepest monthly drop, in percentage terms, since October 2008. The FPI is still up 11 percent YOY, supported especially by stronger prices for dairy, cereals, and vegetable oils.
For the year to date, FPI has been up 17 percent YOY, adjusted for inflation, with oils, cereals, and dairy showing the highest appreciation.
The oils and cereals indexes showed the sharpest MOM declines.
Wheat prices led the depreciation of cereals in July on the potential for reestablished shipments out of Black Sea ports. Continued successful shipments—along with forecasts of a larger Russian wheat crop—may weigh further on wheat prices in August. Bearish wheat weighed on corn, sorghum, and barley. Per FAO, currency shifts and irregular demand helped pressure rice prices. The early progress of the South American corn harvest pressured corn futures.
The oils index fell for the fourth straight month in July on price drops for palm, soybean, canola, and sunflower, pressured by favorable crop outlooks, demand uncertainty, and weaker crude oil. The oil index is still historically strong, but the YOY gains seems less steep due to gains already seen in 2021.
The sugar price index fell for a straight third month, with seven down months in the last 12-month period. A favorable crop outlook in Brazil—bolstered by some weakness in the real and in ethanol demand—weighed on world sugar pricing. We anticipate that India will remain a major seller, though diversion to ethanol and mixed monsoon rains will mean a likely decline in the 2022/23 exportable supply.
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