Global food commodity prices rose 4.2 per cent in June, their steepest monthly increase of the past four years, the United Nations Food and Agriculture Organization (FAO) said today, also noting improved production prospects for the year ahead.
The FAO Food Price Index – a trade-weighted index tracking international market prices for the cereals, vegetable oils, dairy, meat and sugar commodity groups – averaged 163.4 points in June and is now one per cent below the level reached a year earlier.
The June rise, which affected all commodity categories except vegetable oils, was the fifth consecutive monthly increase. The price movement reflects FAO's updating of its cereal supply and demand forecasts for the 2016/17 marketing season.
Sugar prices rose 14.8 per cent from May, as Brazil – the world's largest sugar producer and exporter – endured heavy rains that hindered harvesting and dented yields.
Cereal prices rose 2.9 per cent in the month and are now 3.9 per cent below their June 2015 level. The increase was driven by maize prices, primarily due to tightening spot export supplies from Brazil. Ample wheat supplies and reports of record yields in the United States held down wheat prices, FAO said.
Dairy prices rose 7.8 per cent from May, spurred by an uncertain outlook in Oceania and slower production growth in the European Union (EU). Nonetheless, the index remained 14 per cent below its level of a year ago, according to the agency.
Meat prices rose 2.4 per cent from the revised May value, as average quotations for pork, beef and poultry all rose for the third consecutive month, while vegetable oil prices declined 0.8 per cent from May.
FAO raises global wheat output and cereal consumption forecasts
FAO's Cereal Supply and Demand Brief, also released today, pointed to improved production prospects, primarily for wheat.
Global wheat production is now pegged at 732 million tonnes, more than one per cent higher than anticipated in June, mainly due to improved prospects in the EU, the Russian Federation and the United States, as a result of better weather conditions.
The forecast for world maize production in 2016 was, however, cut down, as prospects for the second crop in Brazil have dimmed and as reduced government support in China led to lower planting. Overall, coarse grain production for this year is now expected to be 1,316.4 million tonnes, some 0.6 per cent lower than last month's forecast, FAO said.
World total cereal utilization in the 2016/17 marketing year, meanwhile, is now projected at 2,555.6 million tonnes, 1.3 per cent higher than the estimate for 2015/16.
As a result, global cereal stocks by the end of the farming season in 2017 are expected to stand at 635 million tonnes, 1.5 per cent below their opening level. The resulting world stocks-to-use ratio for cereals would stand at 24.2 per cent in 2016/17, compared with the 2007/08 historical low of 20.5 per cent, the agency noted.