Global food commodity prices rebounded quickly in August after a second consecutive month of decline led by sugar, wheat, and vegetable oil, the Food and Agriculture Organisation of the United Nations (FAO) has said.

Details of this were highlighted in the FAO Food Price Index report released on Thursday. The index tracks the International prices of the most commonly traded food commodities.

The FAO Food Price Index averaged 127.4 points in August 2021, up 3.1 per cent from July and 32.9 per cent from the same period last year.

“The rebound in August after two consecutive months of decline was led by strong gains in the sugar, vegetable oils, and cereal sub-indices,” it said.

The FAO Sugar Price Index averaged 120.1 points in August, up by 10.5 points (9.6 per cent) from July, marking the fifth consecutive monthly increase and the highest level since February 2017.

“The latest hike in international sugar price quotations was prompted by concerns over frost damage to crops in Brazil – the world’s largest sugar exporter, adding to the negative impact of prolonged dry weather conditions.

It said larger monthly price increases were, however, prevented by a decline in crude oil prices and a weakening of the Brazilian Real against the U.S. dollar.

“Good production prospects in India and the European Union also contributed to limiting the upward pressure on international sugar prices,” the report said.

According to the report, the FAO Cereal Price Index averaged 129.8 points in August, up 3.4 per cent from July and 31.1 per cent above its August 2020 level.

“Reduced harvest expectations in several major exporting countries pushed up world wheat prices by 8.8 per cent month-on-month, to 43.5 per cent above their level of one year ago.

It said among other cereals, price trends were mixed in August.

“Lower barley production outlooks, especially in Canada and the United States of America, and spillover from rising wheat prices pushed up international barley values by 9.0 per cent since July, to 35.6 per cent above their levels of one year ago.

“By contrast, maize prices registered a slight decline of 0.9 per cent.

“Improved production prospects in Argentina, the European Union, and Ukraine moderated the effects of lowered production forecasts in Brazil and the United States of America.

“International sorghum quotations also fell in August, by 2.5 per cent, though still up 43.3 per cent from the same period last year.

Meanwhile, international rice prices remained on a downward trajectory in August, influenced by efforts to promote foreign sales as well as currency movements, it said.

In the report, the FAO Vegetable Oil Price Index averaged 165.7 points in August, rebounding by 6.7 per cent 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 recent historic highs, largely underpinned by protracted concerns over below-potential production and resulting inventory drawdowns in Malaysia.

“In the meantime, rapeseed oil prices received support from firm demand in the European Union, amid prospects of tightening global supplies.

“As for sunflower oil, international price quotations firmed markedly after falling two months in a row, mainly fuelled by limited export availability in the Black Sea region before the 2021/22 harvests reached the market,” the report said.

The report said the FAO Dairy Price Index averaged 116.0 points in August, down marginally from July but still 13.6 per cent above its value in the corresponding month last year.

“In August, international quotations for milk powders fell, reflecting the continued weakness in global import demand for spot supplies combined with seasonally rising export availability in Oceania during the new production season.

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“By contrast, price quotations for cheese rose, underpinned by increased internal demand and tightened supplies in Europe, offset by a slight decline in prices in Oceania on rising production.

“Butter prices also rose slightly, pressured by high import demand from East Asia for near-term deliveries,” it said.

According to the report, the FAO Meat Price Index averaged 112.5 points in August, up slightly from July, placing the index 22.0 per cent 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, and constrained supplies of animals for slaughter in Oceania.

“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 owing to high input costs and labour shortages.

“By contrast, pig meat prices fell due to China’s continued decline in purchases and weak internal demand in Europe amidst a slight increase in the supply of slaughter-ready pigs,” it said.

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