Analytical Reports

FAO Food Price Index drops in August

FAO Food Price Index drops in August, reversing the slight rebound of the previous month
The FAO Food Price Index* (FFPI) averaged 121.4 points in August 2023, down 2.1% from July, reversing the rebound registered last month.
The drop reflected declines in the price indices for dairy products, vegetable oils, meat and cereals, while the sugar price index increased moderately.

The FAO Cereal Price Index averaged 125.0 points in August, down 0.7% from July and standing 14.1% below its value a year ago.
International wheat prices fell by 3.8%, mostly reflecting higher seasonal availability from ongoing harvests in several leading exporters in the northern hemisphere.
International coarse grain prices also declined in August by 3.4%.
Maize prices fell for the seventh consecutive month, hitting their lowest value since September 2020, underpinned by ample global supplies from a record harvest in Brazil and the start of the harvest in the United States of America.
Among other coarse grains, world prices of sorghum declined in August, pressured by the start of the harvest in the United States of America, the world’s largest sorghum exporter, while world barley prices firmed slightly.

By contrast, the FAO All Rice Price Index in August rose by 9.8% month-on-month to reach a 15-year nominal high, reflecting trade disruptions registered in the aftermath of India's July ban on Indica white rice exports. Against a backdrop of seasonally tight availabilities ahead of new-crop harvests, uncertainty over the ban’s duration and concerns that export restrictions would be extended to other rice types caused supply-chain actors to hold on to stocks, re-negotiate contracts or stop making price offers, thereby limiting most trade to small volumes or to previously concluded sales.

The FAO Vegetable Oil Price Index down 3.1% month-on-month after a short-lived increase in July.
The decline reflected lower world prices across palm, sunflower, soy and rapeseed oils.
International palm oil prices fell moderately in August, mainly underpinned by subdued global import purchases as well as seasonally rising outputs in leading producing countries in Southeast Asia.
In the meantime, world prices of sunflower oil declined by nearly 8% from the previous month amid weakening import demand that coincided with abundant offers from major exporters.
As for soy and rapeseed oils, world prices dropped due to improving soybean crop conditions in the United States of America and ample global exportable supplies, respectively.

The FAO Sugar Price Index averaged 148.2 points in August, up 1.3% from July and as much as 34.1% from its level in the same month last year.
The increase in world sugar prices was mainly triggered by heightened concerns over the impact of the El Niño weather phenomenon on global production prospects.
In India, below-average rains in August were detrimental to sugarcane crop development, while persistent dry weather conditions in Thailand are expected to negatively affect the 2023/24 sugar production.
In Brazil, rains hampered field operations in some areas; however, the large crop currently being harvested limited the upward pressure on world sugar prices.
The weakening of the Brazilian Real against the United States dollar and lower ethanol prices also contributed to curbing the rise in world sugar prices.