FAO food price index unchanged amidst mixed bag of commodity price movements

Business a.m.

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.

During the period under review, the FAO dairy price index registered an increase of 1.2 percent, primarily attributed to a surge in international demand for near-term deliveries of butter. The surge was underpinned by growing global demand, seasonally reduced milk deliveries in Western Europe, and relatively low inventories in Oceania.

Meanwhile, the FAO meat price index maintained its level, with a marginal rise in world prices for ovine, pig, and bovine meats largely negating a dip in international poultry meat prices caused by increased supply.