Global food prices fall to six-year low: UNFAO index

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Higher maize prices bode ill for SA, which Grain SA estimates will need to import 766,000 tons of maize this year as drought affected production. The weak rand, which makes imports costlier, makes the situation worse.

The United Nations Food and Agriculture Organisation's (UNFAO) food price index averaged a six-year low of 164.6 points in July amid sharp declines in dairy and vegetable oil prices. The trade-weighted index tracks prices on international markets of five major food commodity groups: cereals; meat; dairy products; vegetable oils; and sugar.

The cereal price index rose by 2% to 166.5 points in July, as wheat and maize prices rose for the second consecutive month partly due to unfavourable weather in North America and Europe. Rice prices, however, continued to fall.

The dairy price index dropped 7.2% from the previous month to 149.1 points, mainly due to lower import demand from China, the Middle East and North Africa, and abundant milk production in the European Union.

The vegetable oil price index was about 5.5% below its June level at 147.6 points - its lowest value since July 2009. The drop was mainly due to a fall in international palm oil prices amid increased production in Southeast Asia combined with slower exports, and a further weakening of soy oil prices on ample supplies for export in South America and a favourable outlook for global supply in 2015-16.

The meat price index remained nearly unchanged from the previous month at 174.1 points. An increase in international prices of bovine meat offset a decline for pig meat and ovine meat while prices for poultry remained stable, the FAO said.

The sugar price index rose by 2.5% to 181.2 points in July, largely due to less than ideal harvesting conditions in the main producing region of Brazil, said the FAO.

Source: BDpro