The global FAO Food price index – presented by international trade credit insurance company, Coface – registered the largest monthly fall in seven years in August this year.
According to the credit insurance company’s Guillaume Rippe-Lascout, the index fell by 5.2% - the largest decline since December 2008. “Admittedly raw materials have declined over the last 10 months, but the FAO index has not reached such a low level since March 2007,” he commented.
Rippe-Lascout added that all key commodities are affected: cereals (-15%), vegetable oils food (-19%) and dairy and sugar (-33%) over the same period.
Some of the major findings of the Coface report are:
- Cereals: wheat, maize and rice prices are falling. Favourable weather conditions have led to better-than-anticipated crops over the past year. After a record crop in 2014, world production continues to be higher than world utilisation.
- Vegetable Oils: Prices are being impacted by the decline of oil palm prices (at a 7-year low). This is due to lower demand from China and India and improved prospects for soybean crops.
- Dairy and sugar: The end of dairy quotas in the European Union has contributed to intensifying the milk supply increase. Over the same period, estimates of powdered milk imports in China in 2015, conducted by USDA, were 33% lower in June (400 000 tonnes in June vs 600 000 tonnes in January 2015). This decrease is related to a higher-than-expected level of inventories in China as well as lower overall consumption.
