Despite the fluctuation of prices within various food commodity categories, the Food and Agriculture Organisation of the United Nations (FAO), has reported that the global benchmark for food commodity prices remained flat in June.
The decrease In the cost of cereals was neutralised by price increases in vegetable oils, dairy products, and sugar, leaving the overall index unchanged from its previous level.
The FAO Food Price Index, a key indicator of global food prices, held steady in June, maintaining its 120.6 points level recorded in the revised figure for May.
Compared to the same month in the previous year, the index fell by 2.1 percent, marking a significant decline from its record high of 160.9 points in March 2022, when food commodity prices reached an all-time peak.
The FAO cereal price index, which tracks the price movements of major cereals, experienced a decrease of 3.0 percent in June compared to May.
The decline was attributed to improved production prospects for major cereal exporting countries, leading to decreases in the prices of coarse grains, wheat, and rice.
In contrast to the decline in cereal prices, the FAO vegetable oil price Index experienced a significant upward trend of 3.1 percent from May to June. This rise was mainly driven by a resurgence in global demand for palm oil and strong demand from the biofuel industry in the Americas for soy and sunflower oils.
After a three-month decline, the FAO sugar price index reversed its downward trend in June, rising by 1.9 percent from May. The price increase was largely fueled by concerns over potential adverse effects of extreme weather conditions and monsoons on sugar production in key exporting countries such as Brazil and India.
The FAO Vegetable Oil Price Index averaged 131.8 points in June, up 4.0 points (3.1 percent) from May and marking the highest level since March 2023. The increase was driven by higher quotations across palm, soy and sunflower oils, while rapeseed oil prices remained virtually unchanged.
After declining for two consecutive months, international palm oil prices rebounded in June, mainly underpinned by a reviving global import demand due to increased price competitiveness. Meanwhile, world soy and sunflower oil prices continued to rise, underpinned, respectively, by firm demand from the biofuel sector in the Americas and declining export availabilities in the Black Sea region.
As regards rapeseed oil, international prices stayed practically stable in June, but markedly above their year-earlier levels amid a tightening global supply outlook for the 2024/25 season.
The FAO dairy Price Index
During the period under review, the FAO dairy price index averaged 127.8 points in June, up 1.5 points (1.2 percent) from May and standing 7.9 points (6.6 percent) above its corresponding value one year ago.
In June, international price quotations for butter rose to a 24-month high, underpinned by increased global demand for near-term deliveries amidst heavy retail sales and seasonally falling milk deliveries in Western Europe. Butter prices were also influenced by low inventories in Oceania, which coincided with the region’s lowest point in milk production.
Meanwhile, skim milk powder prices increased, principally reflecting steady imports from Eastern Asia and somewhat high internal sales in Western Europe. World whole milk powder prices increased slightly in June on firm import demand and seasonally lighter milk production in Oceania. By contrast, cheese prices decreased marginally, mainly caused by a slowdown in global import demand for near-term deliveries.
The FAO Meat Price Index
The FAO Meat Price Index averaged 116.9 points in June, virtually unchanged from May, standing 2.1 points (1.8 percent) below its corresponding value a year ago.
A decline In international poultry meat prices was nearly offset by moderate to slight increases in the prices of ovine, pig and bovine meats. The drop in poultry meat prices was mainly driven by abundant supplies from some leading producing countries.
By contrast, ovine meat prices rose significantly due to the continued high import demand and despite ample export supplies, as farmers began liquidating their herds in response to unusually dry conditions in parts of Australia.
Meanwhile, international pig meat prices increased slightly due to a steady pace of imports, further underpinned by seasonally active internal sales, especially in North America. World bovine meat prices remained broadly stable, reflecting generally well-balanced global demand-supply conditions.
The FAO Sugar Price Index
The FAO Sugar Price Index averaged 119.4 points in June, up 2.3 points (1.9 percent) from May after three consecutive monthly declines, but still down 32.8 points (21.6 percent) from its value in June of last year.
The Increase in June was mainly triggered by lower-than-expected harvest results during May in Brazil, which heightened concerns over the potential impact of prolonged dry weather conditions on sugar production in the coming months.
Erratic monsoon rainfall in India, coupled with a downward revision to crop yield forecasts in the European Union, also contributed to the overall upward pressure on world sugar prices, which was partly offset by the weakening of the Brazilian real against the United States dollar.
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