Gluts in foods from grains to milk and concern China’s slowing economy will curb demand sent global prices down the most in almost seven years.
An index of 73 food prices fell 5.2 per cent in August, the most since December 2008, to 155.7, the United Nations’ Food & Agriculture Organisation wrote in a report Thursday. The gauge has fallen for 10 months in the longest slide since 1998.
A rout in China’s stock market last month and a shock currency devaluation by the largest user of raw materials sent commodity prices to a 16-year low.
Concerns about slowing demand have intensified after years of surplus production swelled global reserves of everything from cheese to sugar. The FAO’s food index is at the lowest in more than six years.
There are “abundant wheat supplies, supported by larger-than-anticipated harvests in the northern hemisphere,” the agency wrote. “The slump in energy prices and concerns about China’s economic slowdown and its negative consequences on the global economy and financial markets” helped pull down food prices, it said.
The organisation’s index of global foods includes prices for grain, meat, dairy, edible oils and sugar.
A gauge of grain prices fell seven per cent to a five-year low. The FAO raised its outlook for global wheat and coarse grain production in 2015-16 on larger harvests for South American corn and European wheat, it said in a separate report.
Dairy product costs slumped 9.1 per cent to the lowest in six years on limited import demand from China and ample supplies, the FAO said. A sugar index fell 10 percent to the lowest since 2007 as a weaker Brazilian real encouraged more outbound shipments and on expectations that India will become a net exporter of the sweetener.
Vegetable oil prices fell 8.6 per cent to a six-year low on slowing import demand for palm oil in India and China, according to the report.
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