World food prices show minor decrease in August as sugar, meat, and cereal prices fall

Business a.m.

The FAO Food Price Index, a key indicator of global food market trends, indicated a decrease in global food prices in August 2024, as the overall value of the index declined to 120.7 points, lower than its revised figure for July 2024.

The downward trend in global food prices was primarily driven by a fall in the prices of sugar, meat, and cereals, while increases in the prices of vegetable oils and dairy products failed to offset these decreases, resulting in an overall decline in the index value for August, according to the  Food and Agriculture Organisation of the United Nations.

The latest decline in global food prices, as indicated by the FAO Food Price Index (FFPI), continues a trend of declining prices that began in March 2022, when the index reached its all-time high of 160.3 points. 

Compared to historical levels, the FFPI in August 2024 averaged 1.1 percent lower than its value from the same period one year ago. Moreover, when compared to its peak in March 2022, the FFPI in August was 24.7 percent lower, indicating a significant drop in global food prices over the past 18 months.

The FAO Cereal Price Index, which measures the monthly change in international prices of cereals, registered a slight decline in August 2024 compared to the previous month, as global wheat export prices fell due to a combination of factors.

According to the FAO report, the Cereal Price Index averaged 110.1 points in August, a 0.5 percent decrease from its July value of 110.7 points. Compared to its value from the same period a year earlier, the index dropped by 11.9 percent.

Global wheat prices softened in August 2024, attributed to a rise in production estimates in Argentina and the United States, leading to an oversupply and reduced international demand.  However, the decline in wheat prices was countered by an increase in maize prices, caused by concerns over potential heat wave damage to crops in the European Union and some areas in the U.S, as well as a downward revision to Ukraine’s production forecast, which tightened domestic supplies.

According to the report, the FAO All Rice Price Index was higher in August 2024, with non-Indica rice prices increasing modestly. The index, which measures changes in the average price of rice worldwide, reported a 0.6 percent increase from its July value.

The upward trend was primarily driven by non-Indica rice prices, which were impacted by seasonal scarcity and currency appreciations of some rice-exporting countries against the U.S dollar.

The FAO Vegetable Oil Price Index, which tracks changes in the average price of four key vegetable oils—palm oil, soy oil, sunflower oil, and rapeseed oil—on the global market, registered a 0.8 percent increase in August 2024 compared to the previous month, reaching its highest level since January 2023. The marginal increase in the index was largely driven by a rise in global palm oil prices, which offset a drop in soy, sunflower, and rapeseed oil prices.

In August 2024, the FAO Dairy Price Index recorded a 2.2 percent increase from its July value, reaching 130.6 points—the highest level since March 2023. Compared to its August 2023 value, the index rose by 14.2 percent.

The report showed that international prices for all dairy products increased, driven primarily by a surge in demand for whole milk powder and tight supplies in major producing regions.

On the other hand, the FAO Meat Price Index registered a decrease of 0.7 percent from its July value, settling at 119.5 points. Despite the decline, the index remained 3.7 percent higher than its August 2023 value.

International prices for poultry meat decreased in August, mainly due to the lingering effects of the Newcastle disease-related voluntary export suspension imposed by the Brazilian government.

The international market for pork products (pig meat) saw a decline in prices for the second consecutive month in August 2024, as lackluster import demand and ample export supplies from major producing regions led to a decrease in prices.

International sheep meat prices also decreased in August, after three months of steep increases. This drop was attributed to a slowdown in import purchases, with China being a notable example.

In contrast, international beef prices saw a slight increase in August, driven by seasonally falling supplies of animals for slaughter in Oceania, which pushed up prices.

In another food commodity market, the FAO Sugar Price Index registered a sharp decline of 4.7 percent from its July value, settling at 113.9 points. The decrease represents a 23.2 percent drop from the index’s value in August 2023, marking the lowest level since October 2022.

The FAO  attributed the decline in international sugar prices to a positive outlook for the 2024/25 season in Thailand and India, where favourable rainfall improved the quality and yield of sugarcane crops. In addition, lower international crude oil prices exerted further downward pressure on sugar prices.

However, concerns over the impact of fires on sugarcane fields in key growing areas of Brazil, as well as reports of lower-than-expected sugar production in the first half of August, led to sharp increases in global sugar prices towards the end of the month.