The United Nations’ Food and Agriculture Organization Food Price Index averaged 123.0 points in July, down 1.5 points, or 1.2%, from June but still 29.1 points, or 31.0%, higher than in July 2020, the FAO said in a release.
July’s drop reflected declines in prices of cereals, dairy products and vegetable oils, which more than offset increases in meat and sugar for the second straight month.
MEAT INDEX UP SLIGHTLY
The FAO Meat Price Index averaged 110.3 points in July, up marginally from June, putting the index 19.6% above the corresponding month last year. Quotations for poultry meat rose the most, underpinned by increased imports by East Asia amid limited production expansions in some producer regions.
Beef prices also strengthened, reflecting tightening global markets because of lower supplies from major producing regions and continued high imports, especially by China.
Conversely, pork prices fell, following a decline in imports by China, notwithstanding limited supplies from Germany linked to the spread of African swine fever.
CEREAL PRICE INDEX DOWN
The FAO Cereal Price Index averaged 125.5 points in July, down 3.8 points, or 3.0%, from June but still 28.6 points, or 29.6%, above its July 2020 value.
International corn prices fell 9.1 points, or 6.0%, month-on-month on better-than-projected yields in Argentina and improved production prospects in the US. Cancelled orders of old crop corn by China also weighed on quotations.
However, prices received some support from continued crop condition concerns in Brazil, where harvesting progressed well behind last year’s pace and high domestic prices encouraged farmers to direct sales to domestic markets.
Wheat quotes edged upward in July, driven by 2.2 points, or 1.8%, to their highest level since mid-2014, on continued concerns over crop North American conditions where persistent dryness hindered yields of durum wheat in Canada and US spring wheat.
Conversely, heavy rain threatened wheat prospects in parts of Europe, while early yields in Russia were slightly lower than expected.
In the southern hemisphere, wheat production outlooks remained favorable in Argentina and Australia.
VEGETABLE OIL INDEX DOWN
The FAO Vegetable Oil Price Index averaged 155.4 points in July, shedding 2.2 points, or 1.4%, declining for a second straight month to a five-month low. This reflected lower prices for soy, rape and sunflower oils, more than offsetting rising palm oil values.
International palm oil quotations rebounded moderately in July, on lower-than-expected output in major producing countries amid migrant labor shortages, primarily in Malaysia.
By contrast, prices for soyoil weakened in July, largely pressured by the lower biodiesel blending mandate in Argentina. Meanwhile, international prices for rape and sunflower oils also contracted, reflecting, respectively, subdued global import demand and prospective record supplies for the 2021/22 season.
CATTLE, BEEF RECAP
Fed cattle traded this week at $120 to $125 per cwt, up $1 to $2 from last week. Dressed-basis trades were done at $196 to $198 per cwt, steady to up $2.
The USDA choice cutout Wednesday was up $3.24 per cwt at $292.58, while select was up $2.62 at $273.77. The choice/select spread widened to $18.81 from $18.19 with 86 loads of fabricated product and 21 loads of trimmings and grinds sold into the spot market.
The USDA reported Thursday that basis bids for corn from livestock feeding operations in the Southern Plains were unchanged at $1.86 to $1.91 a bushel over the Sep futures and for southwest Kansas were unchanged at $0.70 over Sep, which settled at $5.55 3/4 a bushel, up $0.10.
The CME Feeder Cattle Index for the seven days ended Wednesday was $155.80 per cwt down $0.17. This compares with Thursday’s Aug contract settlement of $157.65 per cwt, down $1.55.