UN Food Price Index Drops Amid Mixed Commodity Trends

The UN Food Price Index slightly declined in August, with lower sugar, meat, and cereal prices counterbalancing higher dairy and vegetable oil prices. Despite the dip, it remains below its 2022 peak. The FAO also reduced its global cereal production and utilisation forecasts for the upcoming year.

The United Nations' world food price index saw a subtle decrease in August, according to data released on Friday. Lower prices for sugar, meat, and cereals helped to balance out higher dairy and vegetable oil prices, bringing the index to 120.7 points, down from a revised 121 in July.

The FAO index experienced a three-year low in February this year as food prices dropped from a record peak reached in March 2022 following Russia's invasion of Ukraine. The August value was 1.1% lower compared to a year ago and 24.7% below its peak in March 2022.

Additionally, the FAO lowered its global cereal production forecast for 2024 by 2.8 million metric tons to 2.851 billion tons. This decrease is primarily due to poorer prospects for coarse grain crops in regions including the European Union, Mexico, and Ukraine, affected by hot and dry weather conditions.

The forecast for world cereal utilisation in 2024/25 was reduced by 4.7 million tons to 2.852 billion tons, reflecting a 0.2% increase from 2023/24. The FAO also cut its forecast for world cereal stocks at the end of the 2025 season by 4.5 million tons to 890 million.

(With inputs from agencies.)