Global Food Prices Retreat Further

Global food prices took a significant step back in July, continuing the decline from the all-time highs reached earlier this year. 

The Food and Agriculture Organization of the United Nations (FAO) reported Friday its Food Price Index averaged 140.9 points in July down 8.6% from June and the fourth straight month of decline. 

The Index, which tracks monthly changes in the international prices of a basket of commonly traded food commodities, is now down 11.5% from the peak of 159.3 points reached in March, following the Russian invasion of Ukraine. Nevertheless, the July index remained 13.1% above its year-earlier level. 

“The decline in food commodity prices from very high levels is welcome, especially when seen from a food access viewpoint,” said FAO Chief Economist Maximo Torero. “However, many uncertainties remain, including high fertilizer prices that can impact future production prospects and farmers’ livelihoods, a bleak global economic outlook, and currency movements, all of which pose serious strains for global food security.”  

The FAO Vegetable Oil Price Index fell by 19.2% in July from June, marking a 10-month low. International quotations for all oil types fell, with palm oil prices declining due to prospects of ample export availabilities out of Indonesia, those of rapeseed oil responding to expectations of ample new-crop supplies, and soy oil prices down due to protracted sluggish demand, the FAO said.  

Sunflower oil prices also dropped markedly amid subdued global import demand despite continued logistical uncertainties in the Black Sea region. Lower crude oil prices also pressured vegetable oil values down. 
 
The FAO Cereal Price Index slumped by 11.5% in the month, while remaining 16.6% above its July 2021 value. Prices of all the cereals represented in the index fell, led by wheat, for which world prices declined by as much as 14.5%, partly in reaction to the agreement reached between Ukraine and the Russian Federation to unblock exports from key Black Sea ports and partly to seasonal availability from ongoing harvests in the northern hemisphere.  

World coarse grain prices declined by 11.2% in July, with those of corn down by 10.7%, also due in part to the Black Sea agreement as well as increased seasonal availabilities in Argentina and Brazil. International rice prices also declined for the first time in 2022. 

The FAO Meat Price Index was also down in July, slipping by 0.5% from June, due in part to weakening import demand for beef and pork. In contrast, international poultry meat prices reached an all-time high, underpinned by firm global import demand and tight supplies due to Avian influenza outbreaks in the northern hemisphere.