UN world food price index holds steady in June, cereal prices fall by 3%

The United Nations world food price index remained unchanged in June, as increases in vegetable oil, sugar, and dairy products were balanced by a decline in cereal prices, according to data released on Friday.

The U.N. Food and Agriculture Organization (FAO) reported that the index, which monitors the most globally traded food commodities, averaged 120.6 points in June, maintaining the same level as in May.

The May figure was slightly revised up from the initial reading of 120.4.

Vegetable oils up 3.1%, cereals down 3.0%

In June, the FAO index highlighted various trends in food commodity prices. While the prices of vegetable oils surged, cereal prices experienced a notable decline.

The vegetable oil price index saw a significant increase of 3.1%, driven by higher prices for palm, soy, and sunflower oils. Meanwhile, rapeseed oil prices remained almost unchanged.

On the other hand, cereal prices dropped by 3.0% month on month due to improved production forecasts in key exporting countries such as Kazakhstan and Ukraine.

Maize export prices also fell, influenced by anticipated larger-than-expected production in Argentina and Brazil.

Global cereal production forecast for 2024 up

In a separate report, the FAO raised its forecast for global cereal production in 2024 by 7.9 million metric tons, which is a 0.3% increase, setting the new forecast at 2.854 billion tons.

This adjustment is marginally higher than the production levels in 2023 and marks a new all-time high forecast.

The upward revision reflects improved prospects for coarse grains, particularly maize, with higher harvest expectations in Argentina and Brazil contributing to this increase.

The FAO also forecasted global cereal utilisation for the 2024/25 period to be 2.856 billion tons, marking a 0.5% increase compared to the 2023/24 period.

Additionally, world cereal stocks by the end of the 2025 season are expected to reach 894 million tons.

Dairy and sugar prices rise, meat prices stable

Dairy prices rose by 1.2% in June compared to May, while the sugar index increased by 1.9%, partly due to lower-than-expected harvest outcomes in Brazil in May.

Meat prices remained largely stable, with a decline in international poultry prices offset by slight increases in the prices of ovine, pig, and bovine meats.

Food prices below 2022 peak

Despite the stability observed in June, the FAO index recorded a 2.5% decrease from a year earlier and is 24.8% below its peak in March 2022.

The index had reached a three-year low in February as food prices retreated from the record levels observed following Russia’s invasion of Ukraine in March 2022.

The FAO’s latest reports underscore the dynamic nature of global food commodity prices, with various factors such as production forecasts and harvest outcomes significantly influencing trends.

While vegetable oils and certain other commodities saw price increases in June, the overall stability of the FAO index reflects the balancing impact of falling cereal prices and other market dynamics.