By Adedapo Adesanya
Global food prices continued rising for the second consecutive month in July, led by vegetable oils and dairy products, according to the benchmark United Nations report released on Thursday by the Food and Agriculture Organisation (FAO).
The FAO Food Price Index, which tracks international prices of the most commonly traded food commodities, averaged 94.2 points in July, a 1.2 per cent increase from June and nearly 1.0 per cent higher than July 2019.
The FAO Vegetable Oil Price Index increased 7.6 per cent since June to reach a five-month high, with international quotations for the key oils rising amid the coronavirus pandemic. The agency noted that in the case of palm oil, it was caused by likely production slowdowns, revived global import demand and prolonged migrant labour shortages.
The FAO Dairy Price Index rose 3.5 per cent in the month under review, with all products from butter and cheese to milk powders rising.
The FAO Cereal Price Index was practically unchanged from June, although maize and sorghum prices registered a sharp increase – influenced by large purchases by China from the United States of America.
However, those of rice fell, reflecting prospects of large 2020 harvests while wheat prices changed little amid slow trade activity.
The FAO Sugar Price Index rose 1.4 per cent, as strong sugar crush numbers from Brazil only partly mitigated the effects of rising energy prices and the prospects of lower sugar production in Thailand due to a severe drought.
The FAO Meat Price Index, in contrast, declined by 1.8 per cent in July and averaged 9.2 per cent below its level of July 2019. Pig and bovine meat quotations both fell in the month as global import demand volumes remained below export availabilities, despite the coronavirus-induced disruptions to the industry in key exporting regions.
Poultry meat prices increased, influenced by production cuts in Brazil triggered by high feed costs and concerns over future demand.
The price coverage of the FAO Food Price Index was expanded and rebased in July 2020. The base period 2014–2016 was chosen as the new base as it was considered the most representative period for most markets in the past ten years.
Over time, the body noted that it is important to review price inputs when new conditions affect their availability, representativeness and timeliness. As trade patterns evolve, it is imperative to update the base period to ensure that the weighted basket remains relevant.
