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Global food prices rebound in August

food commodities
Global food commodity prices rebounded rapidly in August after two consecutive months of decline, led by strong gains in the international price quotations for sugar, wheat and vegetable oils, according to the latest data from the UN’s Food and Agriculture Organization (FAO).

The FAO Food Price Index, which tracks monthly changes in the international prices of commonly traded food commodities, averaged 127.4 points in August, up 3.1% from July and 32.9% from August 2020.

The Cereal Price Index averaged 129.8 points in August, up 3.4% from July and 31.1% above its August 2020 level. Reduced harvest expectations in several major exporting countries caused world wheat prices to jump by 8.8% month-on-month to 43.5% above their level of one year ago. Among other cereals, price trends were mixed in August. Lower barley production outlooks, especially in Canada and the U.S., and spillover from rising wheat prices pushed up international barley values by 9% since July to 35.6% above their levels of one year ago. By contrast, maize prices declined 0.9%. as improved production prospects in Argentina, the European Union and Ukraine moderated the lowered production forecasts in Brazil and the U.S. International sorghum quotations also fell in August, by 2.5%, and international rice prices remained on a downward trajectory.

The Vegetable Oil Price Index averaged 165.7 points in August, rebounding 6.7% from July’s five-month low. The recovery mainly reflected higher palm, rapeseed and sunflower seed oil prices. In August, international palm oil quotations reverted to historic highs due to protracted concerns over below-potential production and resulting inventory drawdowns in Malaysia.

The Dairy Price Index averaged 116 points in August, down marginally from July but still 13.6% above its value the same time last year. In August, international quotations for milk powders declined amid a weak global import demand and seasonally rising export availabilities in Oceania, more than offsetting rising butter and cheese prices.

The Sugar Price Index averaged 120.1 points in August, up 9.6% from July, marking the fifth consecutive monthly increase and the highest level since February 2017. The latest increase in sugar prices were pushed up by concerns over frost damage to crops in Brazil, the world's largest sugar exporter. The increase was mitigated by good production prospects in India and the European Union as well as by a decline in crude oil prices and a weakening of the Brazilian real.

The Meat Price Index averaged 112.5 points in August, up slightly from July, placing the index 22% above its value in the corresponding month last year. In August, international quotations for ovine and bovine meats increased, principally underpinned by high purchases, mainly by China. Poultry meat prices also rose, reflecting solid import demand from East Asia and the Middle East and limited production expansions in some major exporting countries. Pig meat prices, by contrast, fell due to China's continued decline in purchases and weak internal demand in Europe.

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