São Paulo – The Food Price Index of the United Nations Food and Agriculture Organization (FAO) was down 5.2% in August from July to 155.7 points. It was the sharpest month-on-month drop since December 2008, as per data released this Thursday (10th) by the organization.
According to the FAO, prices keep falling as a consequence of high supply, low energy costs and uncertainty surrounding the slowdown in Chinese economy. The index tracks the international prices of five major commodity groups: cereals, meats, dairy, vegetable oils and sugar.
The fact that the US dollar is rising steadily against Brazil’s real is partly to blame for the plummeting index. FAO notes that sugar prices dropped 10% in August from July, the reason being this continuously changing exchange rate, as well as the fact that India, the world’s second leading producer, will be a net exporter in the 2015/2016 crop. Brazil is the number one sugar producer and exporter in the world.
In the case of cereals, August’s indicator declined 7% over July and 15.1% over August 2014, following the price reduction of wheat and maize, after two months of a slight increase.
Among vegetable oils, there was a decline of 8.6% in comparison to July. The index for these products reached 134.9 points in August, the lowest level since March 2009. The performance reflects mainly the price reduction of oil palm, which went to its lowest level in six and a half years.
FAO also mentions the significant decline in the prices of poder milk, cheese and butter, which took dairies’ index to decline 9.1% from July to August. This occurred mainly due the weakening of the demand in China, the Middle East and North Africa.
On the other hand, prices of meats remained practically unchanged from July to August. In comparison to August 2014, however, there was a decline of 18%. In August of last year, though, the meats’ index had reached a record level.
*Translated by Gabriel Pomerancblum and Sérgio Kakitani
