FAO Meat Price Index rises again

Following five consecutive monthly increases, the Food and Agriculture Organisation of the United Nations (FAO) Food Price Index* registered a modest decline in July, averaging 161.9 points for the month – down 1.3 points, or 0.8%, from June, and 1.4% lower year-on-year.

Increases in dairy, meat and sugar prices in July were more than offset by the lower international quotations for grains and vegetable oils.

The FAO Meat Price Index averaged 159.9 points in July – 2 points, or 1.3%, higher than the previous month – with prices for all meat products that make up the Index lifting for the month. In fact, July marked the fifth consecutive month of the Meat Price Index increasing.  Most notably underpinning the overall rise was limited pigmeat availability and lighter slaughter weights in the EU, as well as lower supplies of sheepmeat and bovine meat in the Oceania region. Further supporting the Index, FAO reports solid international demand for meat, underpinned by a recovery in interest from Chinese buyers, and imports elsewhere in Asia.

The Dairy Price Index moved higher from June levels, although it remains lower than July last year. The FAO reports that good rainfall in dairy producing regions of Oceania has improved yield prospects for the 2016-17 year. The Sugar Price Index also recorded month-on-month growth, driven primarily by the Brazilian currency (Real) strengthening against the US dollar. According to the FAO, a stronger Real boosts international sugar prices as producers opt to process sugarcane into ethanol to sell locally – consequently limiting Brazilian sugar exports.

International cereal and vegetable oil prices, on the other hand, declined in July. The Cereal Price Index moved lower due to large supplies of major cereals such as maize and wheat. The fall in the Vegetable Oil Price Index was underpinned by a seasonal recovery in palm oil production in South East Asia and subdued import demand.

 *The FAO Food Price Index is a measure of the monthly change in international prices of a basket of food commodities. It consists of the average of five commodity group price indices, weighted with the average export shares of each of the groups for 2002-2004 (Food and Agriculture Organisation of the United Nations).