After falling 2.6 percent the previous month, FAO’s Food Price Index (FPI) fell again in July, down 1.2 percent from June. Adjusted for inflation, July’s FPI was still up about 29 percent YOY on declines among the dairy, cereals, and vegetable oils subindexes vs. mode modest gains for the sugar and meat subindexes.
After appreciating rapidly in the 12 months preceding June 2021, the oils index fell in the last two months. Despite more resilient palm oil prices due to lower production and labor shortages, pricing weakened elsewhere on lower biofuel demand for soybean oil, strong production of sunflower oil, and weaker waning export demand rapeseed oil. The July oil index fell 1.4 percent from June but was up 64 percent YOY.
The dairy and cereals indexes saw larger drops in July, down 2.8 percent and 3.0 percent, respectively, from June. As we’ve reported elsewhere, dairy prices have fallen as production saw its seasonal peak while export demand faltered.
The sugar index was up 1.7 percent from July—up 42 percent YOY—on presumed frost damage for Brazil’s sugarcane crop. Futures could correct in August, however, as that damage now appears less severe than first estimated.
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