News FAO Food Index
Rising food index continues in July
The FAO food price index rose in June for the first time in 2020. This increase will also continue in July, mainly driven by the prices of vegetable oils and dairy products.
The FAO Food Price Index is the benchmark for global food prices and consists of the world's most traded food products. The average number of points of the indices rose by 1,2% in July compared to June, reaching 94,2 points. This means that the average number of points for July 2020 is almost 1% above that of July 2019.
An ascending line
The indices that gained points in July have already started the upward trend in June. The increase in vegetable products is continuing strongly and is 6,6 points (+7,6%) higher at 93,2 points. The increase is mainly driven by the prices of palm, soybean and rapeseed oil. Due to the corona crisis, the production of crude oil was reduced, because the sales market was limited. The sales market is now growing again, for which production is not yet fully adjusted.
The dairy index also managed to make a significant jump in June and will continue in July. Due to an increase of 3,5 points (+3,5%) in July, the number of points now exceeds the average of 100 at 101,8 points. This also surpasses last year's score by 0,7 points. The index is now above the pre-corona level again. The increase is mainly realized by the increase in demand for whole milk powder from Asia, which caused the price to rise.
The sugar index also continued to rise, but considerably less than in June (+ 7,2 points). The index rose by 1 point and thus stands at 76 points for July. This is 3,4 points higher than in July 2019. Rising energy prices and lower sugar production due to drought in Thailand stimulated the price, while sugar production in Brazil (the world's largest sugar producer) put pressure on the price. Hence the limited increase.
Stable or down
The grain index remains stable at 96,6 points, but rises 0,4 points compared to July 2019. Strongly rising maize and kaffir wheat prices due to purchases from China in the United States are diametrically opposed to falling rice prices due to a large yield and relatively stable wheat price. These events combine to keep the index stable.
In addition, the meat index also failed to realize an increase. The number of points decreased by 1,7 to 93 points in July and is 9,4 points lower than the index in the same month last year. The decline is driven by falling prices for pork and beef. Global demand for imports remained below available export volumes. This is despite the fact that the pandemic has caused various disruptions within the slaughter, processing and export activities.
Jorine Cosse
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