World Food Price Drop Indicates Further Increases Unlikely: FAO Economist, According to Reuters

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ROME – A decline in global food prices in July, following five consecutive months of increases, indicates that agricultural commodities are not likely to see significant price hikes in the near future, according to a senior economist at the United Nations food agency.

The Food and Agriculture Organization (FAO) reported a 0.8 percent drop in its food price index for July, bringing it to 161.9 points. This interruption follows a period of rising prices that began after the index hit a nearly seven-year low in January.

Compared to the same month last year, food on international markets was 1.4 percent less expensive, as the index tracks changes in a range of products, including cereals, oilseeds, dairy, meat, and sugar.

FAO senior economist Abdolreza Abbassian remarked that the perception of continuously rising prices may not be accurate, pointing out that forecasts made earlier in July suggested stable pricing over the next decade.

Abbassian attributed the current trends to favorable weather conditions benefitting cereal crops, which have led to increased supplies. The price of cereals dropped by 5.6 percent in July, with only rice showing an increase.

Vegetable oils experienced a notable decline, falling 2.8 percent, primarily due to a five-month low in palm oil prices, driven by a recovery in production in Southeast Asia and diminished global demand for imports.

The forecasts by the FAO and the Organization for Economic Cooperation and Development (OECD) in July were predicated on expectations of enhanced agricultural productivity and slightly larger crop areas.

Abbassian also mentioned that exchange rates could further impact prices. He noted, "If there are no weather surprises, we are expecting substantial crop yields. This will undoubtedly influence prices for the rest of the season."