Southern Times Writer
Harare - Most commodity group prices fell in the month of August with the sharpest decline being witnessed in grains which had a group average decline of 7.3 percent.
Other drops were witnessed in energy commodities which declining by 6.1 percent and metals and other minerals which declined by 6.4 percent and 6.1 percent respectively.
The Food and Agriculture Organisation affirmed the global drop-in agriculture products witnessed in the month of August. The FAO Food Price Index (FFPI) averaged 169.8 points in August 2019, down 1.1 percent (almost 2.0 points) from July but still 1.1 percent higher than in August 2018.
The decline in August marked the third consecutive monthly decrease in the FFPI, with the latest drop reflecting sharp falls in the prices of sugar and leading cereals, outweighing increases in all other sub-indices, especially vegetable oils.
According to analysts, most commodity markets struggled due to the increased trade tensions between the US and China and the global economic activity slowdown is also evidence of the effects of this tension.
According to the World Bank monthly commodity price data, cocoa price fell from July US$2.42/kg to US$2.19/kg, average maize prices fell from US$189.4/mt to US$163/mt, sorghum fell from US$159.5/mt to US$147.9/mt.
“Wheat prices remained under downward pressure, influenced by large export availabilities and, hence, increased competition among the major exporters. Maize values also turned sharply lower in August, primarily because of expectation of a much larger-than-earlier anticipated harvest in the United States, the world’s largest producer and exporter of maize. By contrast, international rice prices edged up in August, underpinned by seasonal tightness in northern hemisphere suppliers and in Thailand because of concerns over the impact of weather on crops,” stated FAO.
However, the month of August saw some increase in the price of other Agric commodities such as vegetable oils, meat and dairy products.
“The FAO Vegetable Oil Price Index averaged 133.9 points in August, up 7.5 points (or 5.9 percent) from July and marking an 11-month high. The increase reflects firmer values for palm and several other oils. International palm oil price quotations surged, underpinned by a rebound in global import demand and lower than expected inventory levels in Malaysia. Moreover, Indonesia reported unfavourable weather conditions in major growing regions, fuelling concerns over future supplies.
“With regards to soy oil, robust demand from both the food and the biodiesel sectors provided support to prices, along with reports of lower than anticipated crush volumes in the United States. Similarly, rising demand from biodiesel producers in the European Union bolstered international rapeseed oil prices,” outlined FAO.
The FAO Meat Price Index averaged 179.8 points in August, up 0.5 percent while the FAO Dairy Price Index averaged 194.5 points up 0.5 percent (1 point) from July, indicating a reversal from the sharp falls registered in the two preceding months and placing the index value only marginally (0.8 percent) below its level in the corresponding month last year. In August, price quotations for cheese, Skim Milk Powder (SMP) and Whole Milk Powder (WMP) all rose, reflecting higher import demand for near-term deliveries, as market activities began normalizing with the end of the summer recess in the northern hemisphere.