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Food Price Index Falls for a Third Month

21 August 2013

GLOBAL - The FAO Food Price Index averaged 205.9 points in July 2013, 4 points (nearly two per cent) below its revised value for June and 7 points (or 3.3 per cent) lower than in July 2012.

The decline in July, which marked the third consecutive monthly drop, was largely driven by lower international prices for grains, soy and palm oil while sugar, meat and dairy quotations were also down from the previous month.

The FAO Cereal Price Index averaged 227.7 points in July, down 8.8 points (3.7 per cent) from June and as much as 33 points (or nearly 13 per cent) below July last year. The sharp decline mostly reflected falling maize prices as favourable weather boosted hopes of a significant production increase in several leading maize producing countries.

Wheat prices also fell but the strong pace of exports limited the decline. Rice price changes varied according to origins, with a decrease in Thai prices contrasting with higher Vietnamese quotations.

The FAO Oils/Fats Price Index averaged 191 points in July, down by 7 points (or 3.3 per cent) from June and the lowest level in three years. The slide in the index mainly reflects easing quotations for both soy and palm oil.

Soy oil values have fallen in response to ample export availabilities, especially in Argentina, combined with weak demand (including from the biodiesel sector), as well as good soybean crop prospects in the United States.

The palm oil price weakness mainly resulted from the combination of ample production and lower than expected import demand, most notably by China. Prices for rape and sunflower seed oil also fell, reflecting improved 2013/14 crop prospects.

The FAO Sugar Price Index averaged 239 points in July, down 3.6 points (1.5 per cent) from June. Sugar prices declined for the fourth consecutive month in July, on the back of anticipated large surplus production in major producing areas, notably in Brazil, the world’s largest sugar producer and exporter.

Declining ethanol prices in Brazil also provided an incentive to convert more sugarcane into sugar instead of ethanol, which put additional downward pressure on international sugar prices.

TheCropSite News Desk

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