Inventories Plunge World Food Prices to 6-Month Low

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Inventories Plunge World Food Prices to 6-Month Low

World food prices dropped in July to low last registered 6 months ago as grains costs declined on optimism for abundant yield, the United Nations said.

A gauge of 55 food items tumbled 2.1% to 203.9 points from 208.3 points in June, an online report published by the Food & Agriculture Organization showed today. The agency’s index of grain prices dropped 5.5% from the prior month to the lowest since August 2010. Vegetable oil prices stood at lows last witnessed in July 2010, the Rome-based UN agency said.

“We are approaching the harvest period so the danger of having further setbacks is much less. This year we feel we are in a rather comfortable situation,”Concepcion Calpe of the UN FAO is quoted by Bloomberg as saying.

Exchange rates for corn, soybeans and wheat on the Chicago Board of Trade, the international benchmark, tumbled lately to the lowest levels since 2010 as US crops enjoyed favorable development conditions and projections improved for yields in Russia and Ukraine.

The US Department of Agriculture may project in the coming week that corn and soybean output in the US, the leading grower, will surge to a record, a Bloomberg survey showed.

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Prices for dairy products tracked by the FAO dropped 4.4% from June, dropping for the fifth month,reflecting both reduced import demand and abundant export availability,” the FAO said on its website. Sugar prices climbed 0.4% from the previous month amid unclear prospects for production in Brazil.

An index of meat prices added 1.8% to 204.8 points,a peak not recorded since 1990, amid dwindling shipments from Australia.

A senior FAO economist AbdolrezaAbbassian said import restrictions slapped by Russia against nations that have imposed sanctions on the country over Ukraine won’t have adverse effects on global food prices over the next one year, Reuters reported.

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To contact the reporter of this story; Jonathan Millet at john@forexminute.com